Dollar Mixed Amid Scant News

January 12, 2010

The dollar recovered overnight by 0.8% against the Australian dollar, 0.5% relative to the kiwi, 0.3% against the Swiss franc and 0.1% versus the euro, but the greenback fell 0.4% against the yen and by 0.1% against the Canadian dollar and sterling.

Among sovereign bonds, gilt and bund yields fell significantly, Treasury yields eased moderately, and the 10-year JGB is steady at 1.36%.  British 10-year gilts are back under 4.0%.

Stock markets are mixed, with gains of 1.5% in China, 1.0% in Indonesia and 0.8% in Japan but losses of 1.0% in Australia, 0.6% in India, Singapore and Sri Lanka, and 0.4% in Hong Kong, Germany, France and Great Britain.

Oil slipped 0.3% to $82.24 per barrel, whereas gold edged 0.1% higher to $1152.50 per troy ounce.

Japan released data on the current account, capital flows, money and credit expansion and the economy watchers index.

  • The seasonally adjusted current account narrowed 5.2% on month in November to Y 1305 billion, but the unadjusted surplus of Y 1103 billion was 76.8% greater than a year earlier.  Merchandise exports eased just 7.0% on year after a 24.6% on-year drop in October.  Imports fell 18.2% from a year before.
  • Net outflows of direct investment (Y464 billion) and portfolio investment (2959 billion yen) were 18.9% and 44.1% less than in November 2008.  Stock and bond transactions generated a Y 2.4 trillion outflow in December.
  • M3, M2, and M1 on-year growth in December of 2.2%, 3.1% and 1.1% were each lower than in November.  Their 2009 increases of 1.8%, 2.7%, and 0.7% were low but at least above increases recorded in 2008.  Bank loans in December were 1.0% less than a year earlier.  Fourth-quarter lending growth amounted to just 0.2% from a year before.
  • The economy watchers index, a barometer of retail-sector activity, improved in December to 35.4 from 33.9 in November, thus breaking a 4-month streak of deterioration from 42.4 in July.  December’s reading was still well below October’s 40.9 print.

Talk that Japan Airlines will be filing for bankruptcy sent JAL shares diving some 45%.

Industrial production in India jumped 11.7% between November 2008 and November 2009, the biggest on-year rise since October 2007.  Factory output climbed 12.7%, while mining went up 10.0%.

Australia’s currency was hit by disappointing mortgage loan data in that economy, which sank by the most since May 2008, a drop of 5.6% in November.  The Reserve Bank of Australia has raised its cash rate three times, putting it at the forefront among those few central banks that have begun to reverse policy.

Filipino exports increased 5.1% between November 2008 and November 2009, more than twice the forecast rise.

British November trade data were somewhat better than forecast.  The goods and services deficit of Gbp 2.912 billion followed Gbp 3.12 billion in October.  The goods shortfall of Gbp 6.784 billion compared to forecasts of 7.1 billion pounds and was smaller than October’s gap of Y 7.016 billion.  The non-EU deficit was at a four-year low.  The DCLG gauge of British house price inflation firmed 0.6% in November.

French business sentiment improved to a 20-month high of 101 in November from 99 in October according to the Bank of France index.  The central bank projected economic growth in the fourth quarter of 2009 of 0.5%, up from a 0.3% pace in 3Q09.  France accrued a EUR 143.3 billion fiscal deficit in the first 11 months of 2009, 115% wider than a year before.  Revenues sank 21%, while spending advanced 4.4%.

An IMF team has been sent to Greece to help advise that government on reducing the Greek budget shortfall, which exceeds 12% of GDP.

Swedish consumer prices firmed 0.2% on month and 0.9% on year in December.  The core rate also climbed 0.2% from November but by a higher 2.7% from a year earlier.  Sweden’s budget swung to a 176 billion kronor deficit in 2009 from a Skr 58 billion surplus in 2008, reflecting the recession.

Danish industrial production and orders rose by 1.4% and 3.1% in November.

German corporate and household bankruptcies in October were 15.9% and 4.2% greater than a year earlier.

Romanian consumer prices rose 0.3% in December and by 4.7% from a year earlier.

The United States and Canada will be reporting trade data at 13:30 GMT.  Canadian house prices, the U.S. NFIB survey results, and the IBD/TIPP index of U.S. optimism will be reported as well today.  Plosser of the Fed has a speaking engagement.

Copyright Larry Greenberg 2010.  All rights reserved.  No secondary distribution without express permission.

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