E-Day

October 26, 2011

Results from today’s summit in Brussels of Euroland leaders are not expected until very late.  The summit is seen as a do-or-die moment for the common currency.  Even if officials managed to agree to more than investors anticipate, cynicism remains high that things will still fall apart in the future.

The dollar rose 1.1% against the Australian dollar in response to tame Aussie consumer price figures that open the door wider for the Reserve Bank of Australia to ease policy if it chooses.

The U.S. dollar otherwise shows losses of 0.5% against the Swiss franc, 0.2% versus the yen and euro, and 0.1% against the yuan and Canadian dollar.  The greenback is unchanged versus sterling and up 0.1% relative to the kiwi.  The yen broke yesterday’s record high by two pips, printing at 75.71 per dollar.

Stocks climbed 1.0% in China, 0.8% in Indonesia, 0.5% in Malaysia and Hong Kong and 0.4% in Australia but fell by 1.2% in Sri Lanka, 0.4% in Thailand and The Philippines, and 0.2% in Japan.  Indian markets were closed for the Festival of Light.  In Europe, the Paris Cac and British Ftse are 0.1% firmer, while the German Dax is unchanged.

The yield on ten-year German bunds advanced four basis points, while those on British gilts and Japanese JGBs slid by one and two basis points.

Oil and gold prices climbed 0.6% and 0.9% to $93.68 per barrel and $1715.10 per ounce.

Business sentiment in New Zealand dropped abruptly to 13.2 in October, a seven-month low, from 30.3 in September. 

Australian consumer prices advanced 0.6% not adjusted and 0.4% adjusted in the third quarter.  On-year inflation fell to 3.5% from 3.6% in 2Q, but the big news came in core inflation.  The trimmed mean core index rose only 0.3%, half as much as anticipated, and by 2.3% from a year earlier, down from 2.6% in the year to 2Q.  The weighted median index of core inflation also went up just 0.3% on quarter and recorded an on-year advance of 2.6%, down from 2.7%.  Those measures had each risen 0.8% between 1Q and 2Q.

Japanese corporate service prices edged up 0.1% in September and recorded an on-year dip of just 0.1%, the least negative 12-month change in three years.

German import prices rose 0.6% in September and 6.6% from a year earlier, but non-oil import prices were unchanged on month and recorded a smaller 3.6% on-year advance.  Export prices were steady last month and 2.9% higher than in September 2010, down from a 3.2% rise in the year to August.

The euro area’s index of leading economic indicators dropped 0.7% last month, and the coincident index edged only 0.1% higher.

The October survey of U.K. industrial trends by the Confederation of British Industries slumped to a 12-month low of minus 18%.  That was twice as negative as in September and three times worse than the mean score in the third quarter.

Greece’s trade deficit widened 8.5% to EUR 1.27 billion in August.

The Swedish trade surplus of SEK 11.9 billion in September was wider than August’s SEK 6.4 billion surplus and the year-earlier surplus of SEK 8.7 billion.  The January-September SEK 67.5 billion surplus was smaller than the SEK 71.1 billion year-earlier surplus, however.

Scheduled U.S. data releases today cover durable goods orders, new home sales, and weekly oil inventories, but the big story is coming out of the summit in Brussels.

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

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