Dollar and Sterling Lower

December 29, 2010

As end-2010 approaches, the dollar fell overnight by another 0.9% against the yen, 0.6% against the kiwi, 0.4% versus the Australian dollar and 0.1% relative to the Canadian dollar.  There was no further change against the Swiss franc or euro and a gain of 0.8% relative to sterling.  Over the past week since December 22, the dollar is unchanged against the pound but down by 2.7% against the kiwi, 1.8% against the yen, 1.5% against the Canadian dollar, 1.4% versus the Australian dollar, 0.4% relative to the yuan, 0.2% against the euro and 0.1% against the Swiss franc.

Stocks overnight rose by 1.5% in Hong Kong, 1.2% in India, 1.1% in Indonesia, 0.9% in the Philippines, 0.8% in Singapore, 0.6% in Thailand and China, and 0.5% in Japan.  In Europe, the Paris Cac is 0.8% stronger.  The German Dax has risen 0.4%, but the British Ftse is off 0.3%.

Following the climb in Treasury yields, ten-year rates firmed six, five and three basis points today in Britain, Germany, and Japan.

While copper touched a record high, oil and gold settled back 0.4% and 0.2% to $91.11 per barrel and $1403.40 per troy ounce.

The Filipino central bank left its key repo and reverse repo rates unchanged at 6.0% and 4.0%.  These rates have been in place since July 2009.

Various parts of the United States continue to struggle to recover from weather disasters.

German consumer prices advanced 1.1% on month in December and accelerated to a 12-month increase of 1.8% from 1.5% in November.  In the years to December 2008 and December 2009, consumer prices had risen by 1.1% and 0.9%.  Package holidays posted a sharply monthly gain of about 20%.

In the euro area, M3 growth accelerated to an on-year pace of 1.9% in November and 1.3% in September-November from 0.9% in October and 1.1% in August-October.  A much smaller drop in marketable instruments accounted for the rise.  Loans to firms and to households respectively dipped 0.1% and rose 2.7% between November 2009 and November 2010.  The normalization of money and credit growth will tilt the ECB’s policy predisposition away from accommodation.

Producer prices in Singapore fell 1.8% in the year to November after a drop of 1.3% in October.

Sweden’s trade surplus of SEK 10.0 billion in November was roughly five times wider than a year earlier, as exports advanced 23%.  The seasonally adjusted surplus widened to SEK 7.9 billion from SEK 7.3 billion in October and SEK 6.5 billion in September.

Spanish retail sales recorded a smaller 1.0% on-year decline in November.

Russia’s purchasing manager indices improved sharply in December.  The manufacturing index increased 2.4 points to 53.5, while the services index went up 2.3 points to 56.4.

Israeli third-quarter GDP growth was revised upward by 0.6 percentage points to 4.4%.  The Bank of Israel earlier this week did not tighten policy further.

Britain’s Hometrack house price index fell 0.4% further in December.  As in the United States, U.K. home prices have lately been sliding anew.

Greek producer prices jumped 1.3% on month and accelerated to a 12-month increase of 5.9% in November from 4.5% in October and 1.0% in November 2009.

The Swiss index of leading economic indicators softened to 2.10 in December from 2.13 in November, suggesting weaker GDP growth ahead.  Earlier this week came word from UBS that the monthly consumption indicator had weakened to 1.63 from 1.72 in October.

Although indications of U.S. holiday shopping have been decent, two measures of consumer sentiment show slippage.  The Conference Board measure fell 1.8 points to 52.5 in December instead of advancing 2 points as analysts were expecting, and the latest ABC/Washington Post weekly gauge of consumer confidence slid three points to minus 44.

South Korean officials labeled North Korea an “enemy” in a further escalation of the two countries’ verbal saber rattling.

No meaningful U.S. or Canadian data releases are scheduled today.  The U.S. Treasury will be auctioning seven-year notes.

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

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