Softer Dollar

November 28, 2011

The dollar gave back ground today, falling 2.3% against the Aussie dollar, 2.1% relative to the kiwi, 1.4% against the loonie, 1.0% each versus the euro and Swissie, and 0.8% against sterling.  The yen is unchanged, and the yuan slid 0.1%.

Stocks climbed 1.6% in Japan, 2.0% in Hong Kong, 1.9% in Australia and Singapore, 1.8% in Thailand, 3.0% in India, 2.2% in South Korea and 1.7% in Taiwan.  In Europe, the Paris Cac, German Dax and British Ftse have jumped so far by 3.5%, 3.0%, and 2.0%.

Oil leaped 3.1% to $99.76 per barrel, while gold climbed 1.7% and back above $1700 to $1716.40 per ounce.

The yield on German bunds got as high in today’s session as 2.34% versus 1.79% on November 17. It is currently five basis points above Friday’s close.  British gilt and Japanese JGB yields are up four and three basis points, the latter to a 4-month peak.  Treasury yields are also indicated to open sharply higher.

The better market appetite for risk is ascribed to new hopes that governments will cauterize the euro debt crisis, but the news there hasn’t been very positive.

  • Remarks by the German finance minister stuck to that country’s rejection of either a lender of last resort role for the ECB or permission the issuance of Euro-wide bonds.
  • The IMF denied press reports that a EUR 400 – 600 billion loan to Italy is in the works.
  • The OECD revised projected euro area growth next year downward to a mere 0.2%, with expected growth of just 0.6% in Germany, 0.3% in France and negative 0.5% in Italy.  GDP in 2013 is seen growing 1.4%.
  • Finnish business sentiment fell four points to minus ten in November.

The Japanese Shoko Chukin index of small business sentiment fell 0.6 points to 45.8 in November, the fourth lowest reading of 2011 and the weakest since June.

The impact of Thailand’s flooding was evident in a substantially larger-than-expected 38.9% monthly plunge of factory output in November.  Production was 35.8% lower than a year before.

Filipino GDP grew 0.3% in 3Q11 and by 3.2% from 3Q10.  Growth in the year to the third quarter of 2010 had been 7.3%.

Taiwan’s index of leading economic indicators dipped another 0.2% in October.

Business sentiment in New Zealand improved according to the NBNZ index to a score of 18.3 in November from 13.2 in October.

Revised U.K. growth forecasts from the British Chamber of Commerce call fro GDP to expand 0.9% this year, followed by 0.8% in 2012 and 1.8% in 2013.  The OECD is projecting British growth of 0.9% this year and then 0.5% in 2012 and 1.8% in 2013.

Euro area M3 money decelerated to a 12-month increase of 2.6% in October from 3.0% in September.  M3 in August-October was 2.8% higher than a year earlier.  A slower 2.2% increase in short-term deposits other than overnight ones was the main drag on M3.  Private loans and credit posted October-over-October increases of 2.7% and 2.1%, respectively.  These data do not change the region’s basis monetary trends.

Five German states have released November consumer price data.  Inflation eased in four instances and accelerated in the other.  The average on-year pace for all five states was 2.4%.

German consumer confidence unexpectedly rose by 0.2 to 5.6 in December.  Analysts were anticipating a score of 5.2.

The CBI’s monthly survey of U.K. retail and wholesale sector trends posted a worse reading in November of minus 19, eight points weaker than in October and the lowest score since March 2009.  The earlier reported industrial trends survey had also produced a reading of minus 19 after minus 18 in October.

Britain’s Hometrack house price index fell by 0.2% in November, but the 2.3% on-year rate of decrease was less than October’s 2.8% and August’s 3.7%.

Italian business sentiment in October was revised up 0.2 to 94.2 and unexpectedly improved another 0.2 points to 94.4 in November.

Irish retail sales firmed 0.1% in October but posted a volume drop of 3.8% from October 2010.  Swedish retail sales increased by an as-expected 0.4% in October, the first rise in four months, but remained 0.5% lower than a year earlier.  Sweden’s unadjusted trade surplus of SEK 7.8 billion last month was 42% wider than in October 2010.  The seasonally adjusted surplus of SEK 9.5 billion was similar to September’s SEK 9.6 billion.

Economic sentiment this month remained adverse in Hungary at minus 23.2 after minus 24.0 in October.  Unemployment in August-October averaged 10.8%.

The OECD projects 2012 growth of 2.0% in the United States after 1.7% this year and 8.5% in China, down from 9.3% in 2011.  Japanese growth is forecast at minus 0.3% in 2011, then 2.0% in 2.12 and 1.6% in 2013.

U.S. new home sales and the Dallas Fed manufacturing index will get reported today.  Analysts expect the Bank of Israel’s interest rate announcement to unveil an easing of policy there.

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

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