New Overnight Developments Abroad: Euro and Swissy Up Sharply

December 29, 2008

The dollar fell 2.2% against the Swiss franc, 2.0% against the euro, 1.3% against the Australian dollar 1.0% against the New Zealand kiwi, 0.6% against the yen but just 0.2% against sterling. The Canadian dollar firmed 0.3%. The South African rand climbed 1.5%. Sterling sank to another record low of 0.9798 against the euro.

Tensions in Gaza lifted oil 7.2% to $40.43 (nearly 25% above last week’s low) and gold by 1.3% to $882.60/ounce. 7K Israeli reservists activated.

European stocks are trading much higher: British Ftse +2.4%, German Dax +2.1%, and Paris Cac +1.1%. Asian bourses mixed. Nikkei up 0.1%. China off 0.4%. India up 2.2%. South Korea flat. Australia +1.1%.

Japanese 10-year JGB slid half a basis point to 1.195%. Japan’s 30-year yield dropped 2 basis points to 1.755%, lowest since April 2003.

The Russian ruble was devalued for a 9th time in December, dipping 1.4%. It has lost 10% against its target currency basket this month.

Officials in Hong Kong intervened to cap HK$ strength. Ukraine officials intervened to support the hryvnia.

Italian business sentiment fell much more than forecast to a record low of 66.6 in December from 71.6 in November.

French third-quarter GDP growth was confirmed at +0.1%, led by government spending. Consumption and business investment rose 0.2% and 0.4%, but residential investment sagged 1.6%. Imports (1.7%) climbed faster than exports (1.4%). The ratio of French debt to GDP advanced 0.4 percentage points to 66.1%, further above the 60% Stability Pact target ceiling.

Switzerland’s KOF index of leading economic indicators fell more than projected to -0.39 in December (weakest since April 2003) from -0.04 in November.

Consumer prices in the German state of Saxony firmed 0.3% in December but fell to a 12-month rate of 1.3% from 1.7% in November.

Three big Japanese insurers are in merger talks.

South Korean consumer confidence softened from 84 in November to 81 in December, lowest since late 1998.

Hong Kong exports and imports fell by 5.3% and 7.9% in the year to November.

Bulgarian consumer prices fell 3.0% in November and to a 12-month rise of 4.8% from 10.1% in October.

The 3-month euribor rate continued to trend downward, sliding to 2.97% from 2.99%.

Kazakhstan’s central bank refinancing rate was cut by 50 basis points to 10.0%.

A Czech central bank official said there is more scope for cutting the 2.25% key rate following reductions of 50 bps earlier this month and 75 bps in November.

Today is the final full trading day of 2008 in several money centers. Views about the length and shape of the recession in 2009 vary.


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