New Overnight Developments Abroad: Mostly Lower Dollar

October 5, 2009

The dollar fell 1.2% against the Australian dollar, 0.6% relative to the Canadian dollar, 0.4% against the kiwi, 0.3% against the euro and 0.2% against the Swiss franc.  The greenback is unchanged against sterling and up 0.2% against the euro.

G7 finance ministers and central bankers released a statement with the same currency policy language as their prior statement in April.  There was some disappointment that a weaker dollar was not addressed.  Japanese Finance Minister Fujii backtracked further, threatening intervention if yen appreciation becomes extreme.  French Finance Minister Legarde said regional economy not strong enough to warrant a stronger euro.  But Nowotny, an ECB policymaker, saw no need for “immediate action” on forex.

The Director General of the Bank of Korea said the won’s recent appreciation has been excessive.

Stocks fell 0.6% in Japan and Australia, 0.8% in Singapore, 1.6% in India, 2.3% in South Korea, and 0.8% in Thailand, but equities gained 1.1% in China, 0.9% in Malaysia, and 0.3% in Hong Kong.  European stocks are marginally up, with rises of 0.2% in Germany and 0.1% in France.

Ten-year JGB and bund yields edged one basis point higher to 1.27% and 3.13%.

Oil prices fell 0.6% to $69.51 per barrel.  Gold firmed 0.1%, however, and is above $1000 at $1005.70 per ounce.

There is a chance the Reserve Bank of Australia announces a rate hike Tuesday.  Australian job ads jumped 4.4% last month, the most since December 2007 and have recovered 8.7% since July.  New Zealand Finance Minister English said the kiwi is stronger than expected and predicted interest rates will rise in Australia before they do in New Zealand.

Bank Indonesia kept its benchmark rate unchanged at 6.5% as expected.

Socialists won the Greek election by a large margin.

Service-sector PMI readings have been released in many countries:

  • Australia scored 49.3 in September, up from 48.0 in August and 44.1 in June.  Capacity usage climbed to 74.3% from 73.5%.
  • Britain’s PMI in services advanced to a 2-year high of 55.3 from 54.1 in August.  Such exceeded forecasts of 54.3.
  • Euroland’s index was revised to 50.9 from a flash indication of 50.6 and readings of 49.9 in August and 45.7 in July.
  • Euroland’s composite PMI improved to 51.1 from 50.4 in August and 47.0 in July.  Scores above 50 connote increasing activity.
  • The German services PMI of 52.1 after 53.8 in August showed reduced but still positive growth in September.  The composite German PMI was 52.4, down from 54.0 in August but above the 49.0 reading in July.
  • The French services PMI shot up 3.9 points to 53.2 from 49.3 in August.  The composite reading was 54.8 versus 51.3 in August and 47.3 in July.
  • The Italian PMI-services reading was 48.5, up from 46.4 in August but still connoting declining activity.
  • Spain’s reading of 46.4 was even lower than Italy’s, albeit above the August score in services of 45.3.  A recovery remains a while away.
  • The Irish PMI-services was only 45.5, down from 46.7 in August.  It’s been below 50 for twenty months.
  • India’s services PMI settled back a half-point to a still robust 54.4.  The composite PMI improved to 55.5 from 55.0 in August.
  • Russia’s PMI in services improved to 53.0 from 52.2 in August and 48.5 in July.
  • The Hong Kong services PMI was 51.8 in September, down form 52.8 in August.

Real retail sales in Euroland slid 0.2% in August, not quite as much as expected and the same result as in July.  Sales fell 2.6% from August 2008.  Retail sales fell 1.5% in Germany but climbed 1.4% in Spain.

Spanish consumer confidence took a big hit last month, falling to 70.3 from 79.5 in August.  Industrial production fell 11.0% in the year to August.

The U.S. services PMI will be released at 14:00 GMT.  An autumn election in Canada seems less likely.

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

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