More Downward Pressure on the Euro on a Day With Lots of Data

November 30, 2010

EUR/USD dipped briefly under $1.3000 for the first time since September 16 and shows a net additional overnight loss of 0.6%.  In contrast to its gain against the euro, the dollar fell 0.5% versus the yen.  Otherwise, the dollar shows gains of 0.2% against sterling and 0.1% relative to the Canadian and Australian dollars but losses of 0.1% against the yuan, Swiss franc and kiwi.

Japan’s Nikkei plunged 1.9%, falling below the 10K threshold.  In other Pacific Rim bourses, equities dropped 2.7% in Indonesia, 2.5% in the Philippines, 1.7% in China, 0.9% in Sri Lanka, 0.7% in Malaysia, Hong Kong and Australia, and 0.4% in Thailand.  Stocks rose 0.6% in India and 0.5% in South Korea.  In Europe, the German Dax is 0.4% higher, the Paris Cac has dipped 0.2%, and the British Ftse is unchanged thus far.

Ten-year German bund and British gilt yields sank seven basis points each, while the 10-year JGB firmed a single basis point.

Euro zone bond premiums above bunds are mostly wider even in the cases of Belgium and France.  Fears of spreading debt problems remain rampant, and the thinking is that the chain reaction will reach economies that are too large to rescue.

Gold firmed 0.5% to $1374.90 per troy ounce, while oil slid by 0.4% to $85.36 per barrel.

Japanese unemployment ticked up a tenth to 5.1% in October, breaking a three-month streak of declines.  Other elements of the labor statistics were better, such as a further increase of the job offers/job seekers ratio to 0.56.  New job offers/new seekers hit a two-year high.

Real Japanese household spending fell 0.9% on month in October, but the decline of 0.4% from a year earlier was not as much as anticipated.  Real household income advanced 5.4% on month and 7.2% on year in October.

Japan’s manufacturing purchasing managers index edged up a tenth to 47.3 but remained below the 50 line of demarcation between expansion and contraction for the third month in a row.  The index had a reading of 52.8 as recently as July.  A further sign of a squeeze on manufacturing came from October industrial production which fell 1.8% following September’s 1.6% drop and was 3.1% below the third-quarter average level.  Even with expected rises in both November and December, industrial output is on track to post a 1.7% quarterly drop (6.4% annualized) in 4Q from 3Q.  The third quarter saw output decline 1.8%.  On-year growth in industrial production has diminished to 4.5% in October from 27.5% in the first quarter of 2010.

Japanese housing starts recorded on-year growth in October of 6.4%, while construction orders were 5.6% lower than a year before.  Both results were weaker than assumed.  So was labor cash earnings, which were only 0.6% greater than a year earlier in October, down from a 0.9% rise in September.  Motor vehicle production last month was 8.4% lower than a year earlier, the first on-year drop since October 2009.

According to preliminary figures, consumer price inflation in the euro area held at 1.9% in November.  The group’s jobless rate ticked up to 10.1% in October from 10.0% in the prior six months.  Joblessness ranged from 6.7% in Germany to 9.8% in France, 11.0% in Portugal and 20.7% in Spain and from 9.9% among men to 10.3% for women and 20.1% for youth.

According to German statistics, unemployment dropped 9K in November, three times more than in October but only about half as much as forecast.  The jobless rate stayed at 7.5%.

British consumer confidence slid to a 4-month low of minus 21 in November from minus 19 in October and minus 18 in August.  The result was worse than analysts anticipated.

French producer prices advanced 0.8% in November, twice expectations, and by 4.3% from a year earlier.  Import prices were flat on month but up 7.6% on year.

Italian unemployment rose 0.3 percentage points to 8.6% in October.  Consumer prices in Italy were unchanged in November and up by 1.7% from a year before.  Dutch producer prices climbed 0.5% on month in October.  Portuguese industrial production in October was 2.5% lower than a year earlier.  Spain’s EUR 3.72 billion current account deficit in September was 28.7% wider than the August deficit.

Switzerland’s UBS consumption indicator resumed its incline with a reading of 1.72 in October after 1.70 in September.  A drop in September had been the first decline in a half year.

Danish real GDP growth slowed to 0.7% last quarter from 1.3% in the second quarter and was export-led.  GDP was 3.0% greater than in 3Q09.  Swedish labor costs for wage earners posted a 1.5% on-year advance in September, up from 1.3% in August.  Salaried workers got 1.8% more than a year earlier.  Norwegian retail sales edged 0.1% higher in volume terms last month but were 0.5% lower on year.  Norway also reported a 5.4% on-year gain in credit and a 4.3% rise in M2 from a year before in October.

Polish GDP was 4.2% higher than a year earlier last quarter.  Hungarian producer prices slid 0.8% on month but rose 7.1% on year last month.

Turkey’s trade deficit narrowed 5.9% on month in October. Indian GDP in 2Q10 was 8.9% greater than in 2Q09.  Malaysian unemployment edged up to 3.2% last quarter from 3.1% in 2Q.  Malaysian PPI inflation slowed a half percentage point to 4.4% in October.  South Korean industrial output fell 4.2% in October but was 13.5% above the year-earlier level.  Factory output in Thailand slowed to an on-year advance of 6.2% in October from 8.1% in September.  Hong Kong retail sales soared to 19.6% above its year-earlier level in October, and M3 growth accelerated, too, to 14.7%.

Building approvals in Australia were 9.3% higher in October than September but just 1.2% greater than a year earlier.  Net exports exerted a smaller-than-assumed 0.4 percentage point drag on Aussie GDP growth in the third quarter, and government spending enhanced growth by 0.9 percentage points.  Private credit grew 0.1% in October.  New Zealand M3 grew 1.8% in the year to October.

The parade of data releases continues in North America where September and 3Q GDP are due from Canada.  Scheduled U.S. releases are the Case-Shiller house price index, the Chicago and Milwaukee PMIs, consumer confidence and weekly chain store sales.  Bernanke and Kocherlakota of the Federal Reserve will be speaking publicly today.

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



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