New Overnight Developments Abroad: Big Rise of Yen and Drop in Nikkei

September 25, 2009

Several key currency big figures are now close by: namely $/Yen 90.0, Gbp/USD 1.6000, CAD/USD 1.0900.  The U.S. dollar fell 1.2% against the yen, encouraged by Finance Minister Fujii’s reiterated opposition to intervention and by fiscal-half corporate repatriations of overseas earnings.  The dollar also eased 0.4% against the Australian dollar, 0.3% against the euro and kiwi, and 0.2% versus the Swiss franc.  The greenback edged up 0.2% against sterling and 0.1% against the Canadian dollar.

Nomura share prices tumbled 16%, most since 1974, after a big share sale.  The Nikkei fell 2.6%.  Chinese equities fell 0.7% to post worst week in 6 weeks.  Stocks fell 1.0% in Indonesia and Thailand, 0.6% in the Philippines and New Zealand, and 0.5% in Pakistan and India.  But in Europe, the Ftse is up 0.6%, and the Dax and Cac40 have edged 0.2% higher.

Bund, gilt, and JGB 10-year yields are each lower this morning.

Oil recovered 1.0%.  Gold edged 0.1% higher.

Headlines from the G-20 summit in Pittsburgh:

  • The G-20 will replace the G-8 as the main forum for economic policy coordination.  G-8 members are the U.K., U.S., Germany, France, Italy, Japan, Canada and Russia.  The G-20 also includes Saudi Arabia, Turkey, Argentina, Mexico, Brazil, China, South Korea, South Africa, the EU, Australia, India, and Indonesia.
  • An agreement to contain banker pay is said to be near.
  • Members pledged not to remove stimulus too soon.

Japanese corporate service prices fell 0.4% in August and by 3.5% from a year earlier.  They had risen 1.6% in the year to August 2008.

Polls show a tightening race in Germany’s national parliamentary election on Sunday.  Merkel is likely to remain Chancellor, but the composition of the next government (grand CDU/SPD coalition like now, center-right CDU/FDP as Merkel hopes, or center-left) is in doubt.  Fate of structural reform is at stake.

Euro area M3 and credit growth slowed further in August.  M3 expanded 2.5% from a year earlier, down from 3.0% in the year to July.  Such rose 3.0% in June-August, down from 3.4% in May-July.  Private credit expansion slowed to 1.1% from 1.8% in July and 2.9% in the year to June.  Loans to firms increased just 0.7% from a year earlier, while mortgage lending fell by 0.4%.  The data point to a delay by the ECB in timing of first rate increase.

British business investment in 2Q09 was revised to show drops of 10.2% from the first quarter and 21.8% from 2Q08.  Manufacturing investment tumbled 16.2% from 1Q and 21.4% from 2Q08.

French consumer sentiment edged up a point to minus 36, still a disappointing figure.  Revised French GDP showed growth of 0.3% last quarter but an on-year decline of 2.8%.  The decline from 2Q08 had initially been reported as 2.6%.  Net exports enhanced GDP growth by 0.8 percentage points, offsetting a drag from inventories of 0.6 percentage points.  Domestic demand contributed 0.1 percentage points to the growth rate last quarter.

Italian retail sales fell 0.4% in July and by 2.6% from a year earlier.  Analysts had expected a monthly increase of 0.2% and an on-year drop of 1.5%.

Spanish producer prices increased 0.6% in August but fell 5.5% from a year earlier.

German consumer confidence improved to 4.3 in October from 3.8 in September and 3.4 in August.

Sweden’s August trade surplus of SEK 6.1 billion was 7-1/2 times greater than a year earlier, as imports tumbled 20% versus a 14% drop in exports.

A high central banking officials from China said that the dollar is being watched closely.  This is a subtle way of telling U.S. officials to safeguard the dollar’s value.  Japanese Finance Minister Fujii voiced opposition to intervention with the intentional goal of depreciating the yen.

Singapore industrial output fell 5.6% in August but rose 12.3% on-year, twice as much as projected.

New Zealand’s trade deficit of NZ$ 725 million in August was twice as large as expected, but a deficit of NZ$ 2.37 billion in the year to August was the smallest 12-month shortfall in over six years.  The Philippines’ trade gap in July widened 2% to $715 million.

The United States reports new home sales, the U Michigan index of consumer sentiment and durable goods orders.  Colombia’s central bank is not expected to change its 4.5% benchmark interest rate today.

Copyright Larry Greenberg 2009.  All rights reserved.  No secondary distribution without express permission.

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