Euro Recovered 0.9% Against Yen and 0.4% Versus Dollar

April 9, 2010

ECB president Trichet apparently said the right things yesterday about a Greek debt default not being allowed to happen.  The euro is firmer as the weekend approaches.  The dollar has lost 0.9% against the kiwi, 0.7% relative to sterling, 0.4% against the euro and Canadian dollar, and 0.3% relative to the Swissie and Australian dollar.  Only against the yen did the dollar advance (0.4%).

Greek-German sovereign debt yield premiums have narrowed around 30 bps.  Ten-year bund and gilt yields are 3 basis points firmer each, and the JGB edged up a single basis point.

Stocks are better with rises of 1.6% in Hong Kong, 1.2% in India, 1.0% in China, 0.8% in Pakistan and Sri Lanka, 0.7% in Thailand and 0.3% in Japan and Singapore.  In Europe, the Paris Cac, German Dax, and British Ftse are also firmer with increases of 1.0%, 0.8%, and 0.6%, respectively.

Commodity-sensitive currencies have appreciated as has oil (up 0.9% to $86.16 per barrel) and precious metal prices like gold (up 0.3% to $1158 per ounce, best since early December).

Two central banks left policy unchanged:

  1. Peru’s key interest rate stays at 1.25%, the level since August 2009.
  2. The Bank of Korea kept a 2.0% benchmark interest rate, the level since February 2009.

Canadian labor market statistics for March were not quite as good as hoped.  Jobs rose 17.9K, not 25K has predicted, and the jobless rate stayed at 8.2% instead of receding further after drops from 8.7% last August.  Average hourly wage posted a 2.2% on-year increase, down from 2.4% in February and 3.3% last October.  However, jobs posted a decent gain of 1.1% from last July and 0.9% from a year earlier.  By comparison, U.S. non-farm payroll jobs dropped 1.8% between March 2009 and March 2010.

British producer price inflation surpassed expectations in March.  The PPI-O index recorded the largest increase since May 2008, rising 0.9% on month and by 5.0% on year.  Such had climbed just 0.4% in the year to last September.  Core producer output prices jumped 0.7%, over twice what had been forecast, and by 3.6% from March 2009.  The producer input index (PPI-I) leaped 3.6% on month, most since June 2008, and by 10.1% on year.  The 12-month change had been minus 0.1% just six months earlier.

French industrial production was unchanged in February and 1.3% above the year-ago level.  Those results are weaker than expected.  The Bank of France left its forecast of first-quarter GDP growth unchanged at 0.4% after releasing data showing a one-point rise in business sentiment to 103 in March.  January’s reading was 104.  So after recovering from 74 in March 2009, sentiment has basically flattened.

The German current account surplus more than doubled to EUR 9.1 billion in February and was also 28% or EUR 2 billion wider than in February 2009.  The seasonally adjusted trade surplus widened to EUR 12.1 billion, but its average in January-February of EUR 10.5 billion compared unfavorably to EUR 15.5 billion in 4Q09.  Exports rose 5.1% on month and 9.6% on year in February.  Imports edged just 0.2% higher on month and rose 4.2% on year.

German manufacturing sales were unchanged in February, as a 0.3% drop in domestic sales offset a 0.3% rise in foreign sales.

Swedish industrial production fell by 0.8% on month in February and 1.5% on year.  Industrial orders dropped 0.9% on month but soared 12.5% on year.

Norwegian consumer prices advanced 0.5% last month and 3.4% from a year earlier.  The PPI increased 2.3% on month and 21.7% on year.  Norwegian industrial production dropped 0.5% in February and by 6.2% from a year earlier.

South Korean producer prices firmed 0.6% in March and accelerated to a 2.6% 12-month rate of climb from 2.4% in the year to February.

China releases March trade data tonight, which are expected to show a deficit.  There’s been no news on yuan policy.

U.S. wholesale trade figures get released later today.

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

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