New Developments Abroad: Awaiting ECB and BOE Monthly Rate Decisions

August 7, 2008

The dollar is 0.3% lower against the yen, euro, Swissy and Australian dollar.  It is off 0.2% against sterling and the C-dollar and -0.1% versus the kiwi.

The Nikkei lost 1.0% after jumping 2.6% on Wednesday.  Korea’s Kospi fell 0.9% after an unexpected rate hike.  The Dax is up 0.6%.  Ftse +0.5%.

Sovereign 10-year yields are narrowly mixed.  Bunds off 1 basis point.  JGB’s off 0.5 bp to 1.525%.

Oil recovered 0.9% to $119.68 per barrel.  Gold rose 0.8% to $889.80.

Japan’s government downgraded its economic assessment to “weakening recently” and at risk of weakening further.  Cites worse production and exports.

The Bank of Korea broke 12 months of unchanged policy, hiking its key rate by 25 bps to 5.25%.  More concerned about inflation at a 10-year high than about slowing economy.

Australian jobs rose 10.9K in July, with full-time workers up 53.7K.  Both increases surpassed expectations.

New Zealand jobs rose 1.2% y/y in 2Q, but the jobless rate increased 2/10ths to 3.9%.  3.8% had been forecast.

Australia’s construction PCI index slid to 41.6 from 42.9 in June.  Such was the 5th consecutive sub-50 reading of this diffusion index.

Japanese core private machinery orders slid 2.6% in June but rose 0.6% in 2Q.  Both changes exceeded Street expectations.

Japanese stock and bond transactions generated a trivial Y 4.2 bln inflow last week after an outflow of Y 583 bln the prior week.

The Chinese yuan fell slightly for the third drop this week.  The Olympics start Friday.

Germany’s current account surplus beat expectations, rebounding to EUR 18.5 bln in June from EUR 7.7 bln in May.  Exports jumped 4.2% m/m, but outlook is poor.

France’s trade deficit widened 20% m/m in June to EUR 5.64 bln, EUR 1.0 bln greater than expected.

South Africa’s confidence indicator in July bounced up just marginally from a 5+ year low in June.

The Halifax measure of British house prices slumped 1.7% m/m in July and dropped 8.8% y/y in May-July.

Swedish consumer price inflation of 4.4% y/y in July was the highest since November 1993.  The Riksbank meets September 3rd.

German industrial production rebounded only 0.2% in June, but May’s drop was revised to -1.8% from -2.4%.  Production fell 1.7% in 2Q, further signaling negative GDP growth last quarter.  Analysts were expecting output to rise about 0.8% m/m.


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