Softer Dollar

September 11, 2012

The dollar has lost 0.6% against the kiwi, 0.5% against the euro, 0.4% versus the loonie and Australian dollar, 0.3% relative to the Swiss franc and yen, and 0.2% against sterling.  The yuan is steady.

The euro strengthened to $1.2821, its firmest level since May 21st.

Euro debt concerns continued to weigh on European equities, depressing shares by 1.0% in Spain, 0.5% in Britain, 0.4% in France and 0.2% in Germany.  In spite of pressure for a delay, Germany’s high court said it would indeed rule tomorrow on the constitutionality of the ESM facility and new fiscal plan for the EU.

Share prices in the Pacific Rim fell by 0.7% in Japan, 0.6% in China, and 0.2% in Australia and South Korea, but such rose 0.5% in India and New Zealand, 0.3% in Singapore and 0.2% in Hong Kong.

Ten-year British gilt and Japanese JGB yields are unchanged.  So is the $96.52 per barrel price of oil.  The 10-year German Dax yield slid two basis points, and the price of gold has edged up 0.1%.

Today is the 11th anniversary of the 9-11 attacks on the World Trade Center and Pentagon.

Bank lending in China of 703.9 billion yuan in August exceeded expectations by more than 15%, providing some relief against recent fears that the Chinese economy has continued to slow.  Lending was still fractionally less than the CNY 729 billion average during the prior four months.  Moreover, M2 money growth in China of 13.5% on year was slower than consensus forecasts of 14.0%. 

Japan’s Ministry of Finance released results of its quarterly survey of business sentiment.  The index for large manufacturers printed at 2.5% in the third quarter, a significant improvement from minus 5.7% in 2Q.  Another increase is expected by December.

Japanese M2 money growth ticked up to an on-year pace of 2.4% in August from 2.2% in July and 2.3% in 2Q12.  Broad liquidity was only 0.3% higher than in August 2012.

Japanese machine tool orders were 2.6% lower in August than a year earlier.  That followed a 6.7% drop in the year to July.

Consumer confidence in India weakened to a reading of 39.6 in August from 41.1 in July.

Business confidence in Australia also worsened, printing five points lower in August at minus 2, which nearly erased all of a 6-point rise in July.  Business conditions, by contrast, rose four points to +1, the first non-negative reading since April’s score of zero.

South Africa’s current account deficit last quarter equaled a greater-than-anticipated 6.4% of GDP.  Turkey’s current account deficit in July of $3.9 billion was 7.9% smaller than in June.

German wholesale prices jumped 1.1% on month in August, about four times more than projected.  This caused a rise in the 12-month increase to 3.1% from 2.0% in July and 1.1% in June.  Higher energy costs were largely responsible for this acceleration.

Britain’s GBP 7.149 billion merchandise trade deficit in July was the narrowest in 17 months and down from GBP 10.068 billion in June.  Exports jumped by 9.3% on month.  The goods and services trade gap narrowed to GBP 1.517 billion from GBP 4.33 billion in June.

The British house price balance index of the Royal Institute of Surveyors printed at negative 19% in August after minus 23% in July.  The result was better than expected, and July’s score was revised upward by a percentage point.  French jobs contracted by 22.4K in the second quarter, reversing a rise in 1Q. 

In Holland, where elections are to be held tomorrow, the trade surplus fell by 34% to EUR 2.75 billion in July.  Polls suggest the next government will not be dominated by anti-bailout proponents.   Greece’s prime minister holds talks today with ECB Pdt Draghi.

CPI inflation in Hungary ticked up to 6.0% last month from 5.8% in July.  The Czech current account deficit widened 69% in July.  Romanian CPI inflation accelerated to 3.9% in August from 3.0% in July.  Romanian industrial production rose 1.1% on month and 1.9% on year in July.

The United States and Canada report monthly trade figures at 12:30 GMT today.  Other U.S. data releases are the NFIB small business sentiment index, the IBD/TIPP optimism index, the JOLTS index of job hires and leavers, and weekly chain store sales.  Canada releases housing starts as well as trade numbers, and Mexico is set to report industrial output.

Copyright 2012, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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