New Developments Abroad

June 6, 2008

After big losses on Thursday, the dollar recovered modest ground except against the euro where it has been flat. The greenback is up 0.3% against the kiwi, +0.2% versus sterling, the yen and Australian dollar, and up 0.1% relative to the C-dollar and Swiss franc.

The Nikkei rose 1.0%. Australia’s S&P/ASX index climbed 1.1%, but China’s CSI 300 fell 0.6%.

In Europe, the Ftse gained 0.9%, and the Dax (0.2%) and Cac 40 (0.3%) are modestly higher.

Ten-year JGB yields ran up 7 basis points to 1.795%. European long-term yields are flat to narrowly lower.

Oil hit an overnight high of $129.79, up from a Thursday low of $121.61/bbl, and is 1.4% higher on balance. Gold climbed 1.1% to $885.00/ounce in reaction to dollar weakness on Thursday.

Australia’s construction PCI index slumped to a series low of 36.9 in May from 42.6 in April.

Japanese reserves fell $6.86 billioln in May following an $11.75 billion drop in April.

The German Bundesbank revised up projected 2008 growth by 4/10ths to 2.0% but revised down projected 2009 growth by 6/10ths to 1.4%. New CPI forecasts are 3.0% this year followed by 2.2% in 2009.

The French trade gap narrowed 12.9% in April to EUR 3.72 bln. The bad news was a 0.2% dip in imports, a sign of slowing domestic demand. France’s year-to-April budget deficit of EUR 45.01 bln was 3.7% wider than a year before, reflecting a 1.9% decline in government revenues.

German industrial output fell 0.8% in April. A 0.2% uptick had been forecast, and the drop in March got revised to 0.8% from 0.5% reported initially. Dutch factory production rose just 0.4% in the year to April.

Canadian labor statistics for May get reported at 11:00 GMT (07:00 EDT). A moderate 10K increase of jobs is expected. U.S. labor statistics will be reported 90 minutes later. The street consensus is for non-farm employment to decline about 60K and for the jobless rate to edge up a tenth to 5.1%.


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