Aussie and New Zealand Dollars Strengthen

March 26, 2014

The U.S. currency has declined 0.8% against the Australian dollar, which hit a 4-month high of USD 0.9237, 0.5% versus the kiwi, and 0.2% relative to the loonie.  The greenback is also unchanged against the yen and sterling, up 0.4% vis-a-vis the Swiss franc, 0.2% higher against the euro and up 0.1% versus the yuan.

Among U.S. reports yesterday, investor confidence was heartened by the strong Conference Board report on consumer sentiment, while shrugging off less stellar news from the Richmond Fed manufacturing index, new home sales, and the Case Shiller house price data.  St. Louis Fed President Bullard played down the substance behind the recent modification of forward policy guidance.

Share prices went up 1.2% in South Korea, 1.3% in Singapore, 0.8% in Australia, 0.7% in Hong Kong, 0.6% in Taiwan, and 0.4% in Japan.  Equities in China and New Zealand dipped 0.2% and 0.1%.  In European action, stocks have climbed 1.2% in Germany and Spain, 0.9% in France, 0.7% in Italy and Switzerland, and 0.5% in Britain.

The 10-year German bund and British gilt yields are steady, but the 10-year Japanese JGB firmed two basis points.

Gold and oil also moved up slightly, rising by 0.3% to $1,314.80 per ounce and by 0.2% to $99.35 per barrel.

Reserve Bank of Australia Governor Stevens made upbeat remarks about private consumption and continuing recovery.  He expressed satisfaction with the central bank’s interest rate level and did not complain about the Aussie dollar being too pricey.

Japanese corporate service price inflation remained at 0.7% in February, compared to 0.5% in 2013, negative 0.4% in 2012 and negative 0.7% in 2011.  The on-year advance was led by a 1.5% increase in finance and insurance and a 1.4% 12-month rise in transportation costs.

Revised South Korean GDP data showed on-year growth of 3.7% last quarter after 3.4% in 3Q and 3.0% in 2013 after 2.0% in 2012.

Singapore industrial production was distorted by the Lunar New Year, riesing 6.2% last month following a 7.8% drop in January.  Output was 12.8% greater than a year earlier. 

Regional condemnation continues over the Malaysian government’s poor handling of the crash of Flight 370.

Japanese Prime Minister Abe’s government intends to front-load public investment into the first half of the fiscal year that begins April 1.

German consumer confidence in April showed a reading of 8.5, same as in March and the most optimistic since the first month of 2007.

Italian consumer confidence jumped 4.0 points to a score of 101.7 this month, easily beating analyst expectations.  But retail sales were unchanged in January after dipping 0.3% in December.  Analysts were anticipating a better result from sales.

The UBS gauge of Swiss consumption rebounded to a reading of 1.57 in February from 1.49 in January but fell short of December’s 1.80.

Swedish consumer confidence edged lower to 99.6 in March from 99.7 the month before.  Sweden posted a SEK 10.1 billion trade surplus in the first two months of 2014, identical to the year-earlier surplus.  Exports and imports recorded on-year growth of 0.9% and 1.0%.

The euro area’s leading and coincident economic indicators, compiled by the Conference Board, respectively rose 0.1% and fell 0.1% in February.  Both outcomes were weaker than January results.

Icelandic CPI inflation edged up to 2.2% in March from 2.1% in February.

Scheduled U.S. data releases today include durable goods orders and the service-sector PMI compiled by Markit Economics.  President Obama is in Brussels attending an EU-U.S. meeting to coordinate the response to Russia’s annexation of Crimea.

Copyright 2014, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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