New Overnight Developments Abroad: Gold Stronger While Dollar and Yen Softness Resumed

November 23, 2009

With Japanese markets closed for Labor Thanksgiving, the dollar and yen moved downward in tandem against commodity-sensitive currencies by 1.3% against the kiwi, 1.2% against the Canadian dollar, and 1.0% against the Aussie dollar.  The greenback and yen also lost 0.8% against the euro and Swissy and 0.6% relative to sterling.  Traders attributed renewed dollar erosion to expectations that the Fed will not raise rates anytime soon.  That’s really not a novel thought.  Dismal post-mortems on the Obama trip probably hurt, too.  Stock market gains in Asia and Europe signify a rebound in risk appetite, which tends to be associated will a weakening dollar.

Gold shot up 1.6%, hitting a new record high of $1167.88 per troy ounce.  Oil advanced 1.3% to $78.45.

Stocks are trading 1.7% higher in Britain and France and are up 1.6% in Germany.  Asian equities improved 1.4% in Hong Kong, 1.3% in Singapore, 1.0% in China, and 0.9% in India.  Australian stocks closed 0.7% higher.

Ten-year bund yields rose four basis points.  Treasury yield indications and gilt yields are also up.

Flash PMI readings for November in Euroland, France and Germany beat expectations in most instances and suggest better growth in the fourth quarter than the third quarter.  Flash readings are based on roughly 85% of all information that goes into the final results due in early December.

  • The euro area’s composite index rose to a 24-month high of 53.7 from 53.0 in October, 51.1 in September, 50.4 in August and 47.0 in July.  The factory index only firmed three-tenths to 51.0, best since March 2008, but manufacturing production of 54.6 after 53.9 in October constituted a 26-month high.  The services PMI score was 53.2 versus an expectation and October reading of 52.6.  Such was a two-year high.  Jobs continue to contract at an undesirably strong pace, and the sub-index for new orders fell for the first time since its cyclical low last February.
  • The French composite PMI reading was 59.8, a 37-month high and up from 58.6 in October, 54.8 in September, 51.3 in August and 47.3 in July.  The manufacturing PMI settled back to a two month low of 54.2 from 55.6, but the services PMI was 60.4, up by a big 2.4 points from 57.7 in October and 49.3 as recently as August.
  • The uptrend of the German composite PMI quickened, printing at 53.5 after 52.3 in October, 52.4 in September and 54.0 in August.  The manufacturing component rose a full point to 52.0, and the services index gained 0.8 to 51.5.  Manufacturing order backlogs are thickening.

Australian auto sales rose 3.7% on month and 3.3% on year in October.

New Zealand consumer confidence fell 4.4 points to 121.5 in October.

Taiwan export orders posted their first on-year rise (4.4%) in 13 months in October.  Industrial production climbed 6.6% from a year earlier, and unemployment fell for the first time in a year.

Thai GDP increased 1.3% last quarter, less quickly than in 2Q and dropped 2.8% from a year earlier.

Singaporean consumer price deflation doubled to a 12-month drop of 0.8% in October from 0.4% in September.

Swiss M3 advanced 7.7% in the year to October, same as in September.

Retail sales in Hungary were 7.3% lower in September than a year earlier, their biggest on-year drop since at least 1998.

The Chicago Fed index, U.S. existing home sales, and Canadian retail sales figures are due later today.  A rate policy meeting at Colombia’s central bank, originally scheduled last Friday, was postponed to early this week.  A rate decision from the Bank of Israel is due shortly as well.

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

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