Weaker Aussie Dollar on Rate Cut Speculation

May 6, 2013

The U.S. currency has climbed 0.7% against the Aussie dollar but is otherwise fairly stable relative to Friday closing levels.

  • Australian retail sales fell 0.4% in March.  It was the first decline since December.
  • Australian job ads dropped 1.3% in April, more than twice as fast as the 0.5% decrease in March.
  • The MI-TD gauge of Australian price pressure held steady at 2.1% in April, near the low end of the central bank target.
  • Markets are positioned for a reduction of the Reserve Bank of Australia’s 3.0% Official Cash Rate even though most analysts think policymakers will leave such unchanged.  See prior statement of April 2 by clicking here.

The U.S. dollar has risen 0.3% against the yen and kiwi, 0.2% relative to the yuan and sterling, and 0.1% versus the loonie and Swiss franc.  EUR/USD is unchanged.

Markets are closed today in Japan for the final observance of Golden Week and in Britain for a bank holiday.

Share prices are down 0.5% in Spain and Italy but unchanged in Germany.  Equities rose 1.3% in China, 0.5% in Australia and India, 1.4% in Indonesia, and 0.4% in Singapore and Taiwan.  The Dow ticked marginally lower at the open after setting a record high on Friday.

Ten-year German bund yields are unchanged.  The 10-year Treasury yield is a basis point firmer.

Several service-sector purchasing manager surveys were published.

  • China’s HSBC-compiled services PMI scored a 51.1 in April, lowest since August 2011 and down from 54.3 in March.  Employment fell for the first time in over four years.  The composite services and manufacturing PMI was also 51.1, down from 53.5.
  • India posted PMI readings of 50.7 on services and 50.5 on its composite measure in April.  Both readings in March had been 51.4.  Growth is slowing, but inflation also appears to have cooled.
  • Euroland’s services PMI of 47.0 was revised from a preliminary reading of 46.6 and at a two-month high.  Within the common currency bloc, the Irish service sector PMI was at a 3-month high of 55.2.  The German index of 49.6 was at a 6-month low.  Italy hit a 20-month high of 47.0, and the French 44.3 reading was at a 4-month peak.  But Spain’s 44.4 was at a 4-month low.
  • Euroland’s composite PMI was 46.9, revised up from 46.5 and above the 46.5 reading in March.  Italy’s 46.6 was a 19-month high.  The French scored a 4-month high of 44.3, but Spain’s 44.0 index was at a 4-month low.  Germany’s 49.2 was at a 5-month low.  The data all in all suggest that GDP will have contracted about 0.4-0.5% in 2Q, suggesting a steepening recession, not one that’s poised to end around midyear.
  • Sweden’s service-sector PMI improved not quite as much as assumed, recovering to 48.6 in April from 47.5 in March but remaining well below February’s reading of 54.6.

GDP in Indonesia advanced by 1.4% on quarter and a slightly slower-than-forecast 6.0% on year during 1Q13.  China’s index of leading economic indicators fell by 0.6% in March.  Taiwanese CPI inflation decelerated to 1.1%, a 14-month low, in April.

Ezone retail sales dipped 0.1% on a volume basis in March and were 1.4% lower than a year earlier.  Sales firmed 1.1% at an annualized rate between 4Q12 and 1Q13.  In the year to March, sales of food, drink and tobacco dropped by 1.2%, while all other retail sales slumped by 3.3%.

The Sentix gauge of investor sentiment toward the euro area recovered 1.7 points to a two-month high of minus 15.6 in May but remained significantly weaker than the average first-quarter reading of minus 7.2.

Canadian housing permits jumped 8.6% in March, easily beating expectations for a gain of less than 2%.  Mexican consumer confidence edged up 0.3 points to 95.7 in April but remained 1.5 points lower than a year ago.  South African unemployment climbed above 25% to 25.1% in 1Q from 24.9% in 4Q12.

For the second time this year, subway service has been disrupted around Grand Central Station in NYC because of a risk of terrorism.

Copyright 2013, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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