Dollar Looking to Stocks for Direction

August 11, 2011

The Swiss franc fell back 1.9% against the dollar and has lost 4.6% since its record peak on Tuesday.  The yen, in contrast, rose 0.4% and got within six pips of this year’s 76.25 record high.

The dollar dropped 0.4% against the Chinese yuan, which reached a record high of 6.3895 per dollar in overnight trading.  There’s been speculation that Beijing authorities were buying Chinese equities.  China’s stock market firmed up 1.5% overnight.

The dollar, which has been moving inversely in lockstep with the stock market, is unchanged against the euro and sterling.  The dollar eased 0.6^ against the kiwi, 0.3% relative to the Australian dollar, and 0.1% against the loonie.  

Tuesday’s post-FOMC rally in U.S. share prices got wiped out in a new wave of selling yesterday.  However, equities were mixed in overnight trading in Asia and Europe, posting gains of 0.6% in South Korea, 0.8% in New Zealand, 1.5% in China, 0.5% in The Philippines, and 0.2% in Thailand and Indonesia but falling by 1.0% in Hong Kong, 0.4% in Pakistan and India, 0.9% in Singapore, 0.3% in Malaysia and 0.2% in Taiwan.  In Europe, the Paris Cac is down 0.5%, whereas the German Dax and British Ftse are 0.8% and 0.5% higher.

Oil eased 0.1% and gold firmed 0.1% to $82.78 per barrel and $1,785.80 per ounce.

Australian July labor market statistics weakened.  The jobless rate increased to 5.1%, most since November, from 4.9% in May and June.  A drop of 22.2K in full-time workers offset a 22.1K rise in part-timers.  The net 0.1K fall in total employment fell short of the expected rise of 10K.  The participation rate was flat.

The TD-MI gauge of expected CPI inflation in Australia receded to 2.7% from 3.4%.  New Zealand consumer confidence improved 3.6% in August, but home prices dropped by 0.6% on month and were just 0.5% above their year-earlier level.  New Zealand’s business purchasing managers index slid to a three-month low of 53.2 in July from 54.3 in June.  Thai consumer sentiment printed at 74.4 in July after 72.3 in June.

The Bank of Korea left its 7-day repo rate at 3.25% despite above-target inflation, citing global downside growth risks.

Japanese core private domestic machinery orders increased 7.7% in June versus a forecast rise of 1.7%.  However, their 2.5% increase in the second quarter was lower than predicted three months ago, and government and foreign orders for machinery respectively fell by 3.2% and 5.9% in June.  Core private orders are forecast to increase by a modest 0.9% in the third quarter.

Stock and bond transactions generated a Japanese capital inflow of JPY 190 billion in the week to August 6 versus a JPY 333 billion outflow in the prior week.

German wholesale prices posted a 0.6% monthly drop for a second straight time in June.  On-year WPI inflation of 8.2% was down from 8.5% in July and 10.9% in March.  However, oil products were 16.2% higher in price than a year earlier.

Greek import price inflation accelerated two-tenths to 6.7% in June.  Irish consumer prices were flat in July and showed the same 2.7% 12-month rate of increase as in June.  Swedish consumer prices were unchanged on month but accelerated to 3.3% on year in July from 3.1% in June.  Hungarian CPI inflation slowed to 3.1% from 3.5% in June. 

Britain’s index of leading economic indicators stagnated in June.  The coincident index ticked up only 0.1%.  The London riots this month will constitute another depressant.

Greek unemployment climbed to 16.6% in May from 15.8% in April. Finnish retail sales in June were 6.7% above a year earlier, less than May’s 8.2% on-year advance.  The Czech current account deficit of CZK 9.3 billion in May was only half as wide as expected.  Turkey’s current account shortfall narrowed by a slight 4% to $7.55 billion in June.

U.S. and Canadian trade figures will be released at 12:30 GMT.  U.S. jobless claims and Canadian house prices also get reported today, as do Brazilian retail sales, and South African and Mexican industrial output. Peru’s central bank will reveal its latest interest rate decision.  Like the Bank of Korea earlier today, analysts think it will not tighten amid the ongoing world financial market turbulence.

Copyright 2011, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

Tags: , ,


Comments are closed.