New Overnight Developments Abroad: Mixed Dollar Ahead of 4Q U.S. GDP Figures

January 30, 2009

In another sign of risk aversion, the yen (+0.6% against the dollar) is today’s strongest currency. The weakest ones are the Ozzie dollar (-1.8%) and the Russian rouble, which slid past 40 against its target basket. The dollar fell 0.2% against sterling but shows gains of 0.5% against the euro and kiwi and 0.3% relative to the Canadian dollar. The Swissy is unchanged.

The Nikkei lost 3.1% and closed below the key 8000 level following some extremely bleak data including news of a 9.6% monthly plunge of industrial production last month. Stocks fell 1.2% in Singapore, 0.4% in South Korea and 0.8% in Sri Lanka but rose 0.9% in Hong Kong, 0.6% in Indonesia and Thailand and 2.6% in India. European share prices are little changed.

Gold continued to make a big upward run, gaining another 2.0% to $923.70 per ounce. Oil is steady at $41.46 per barrel.

The ten-year JGB yield climbed another 2 basis points to 1.30% despite a weak stock market. European bond yields firmed, too.

Among many other Japanese data releases,

  • The jobless rate jumped half a percentage point to 4.4%, highest since January 2006. Employment fell by a bigger 1.0% y/y, and the job offers to seekers ratio slid to 0.72 from 0.76 in November and 0.98 at end-2007.
  • Industrial output and shipments tumbled 39.7% and 39.3% at a seasonally adjusted annual rate last quarter, spurring talk that GDP will be off at least 10%.
  • Inventories as a percent of industrial shipments soared 6.5% in December and 33.5% from a year earlier.
  • Consumer price inflation rose 0.4% in the year to December, down from 1.0% in Nov and 1.7% in October. Non-energy CPI inflation rose 0.2% y/y but dropped at a 1.8% annualized pace in 2H08 after climbing 2.2% in the first half of last year. Tokyo consumer prices in January fell 0.4% from December.
  • Real household spending dropped 2.5% on month in December and by 4.6% from December 2007.
  • January’s PMI reading (purchasing managers index) of 29.6 was down from 30.8 in December and its lowest since at least October 2001.
  • Housing starts sank 5.8% in the year to December but rose 3.1% in 2008 as a whole.
  • Construction orders tumbled 27.3% in the year to December and firmed 1.5% last year.

Private-sector credit in Australia unexpectedly recorded the first decline since 1992 in December, a drop of 0.3%. It’s on-year advance of 6.7% was the lowest since April 1994. Australia’s index of leading economic indicators fell for a third straight time and by a big 1.0% in November. Australia’s central bank is expected to cut its 4.25% cash rate by at least a full percentage point next Tuesday.

British consumer confidence worsened in January to a six-month low of -37. But the Bank of England released better-than-assumed money and credit data for December. Mortgage approvals rebounded from a record low of 27K to 31K. Net mortgage loans of Gbp 1.903 billion were up 128% from November but still off 75.3% from December 2007. M4 rose 16.1% in the year to December versus 16.2% in November.

South African money and credit growth slowed in December, further encouraging expectations of a sizable rate cut there next week.

South Korean industrial production slumped 9.6% in December and by 18.6% from a year earlier. Such had fallen 10.7% in November.

Italian producer prices fell 1.3% in December, trimming their 12-month rise to 0.6% from 2.1%. The PPI on average advanced 6% in 2008. Non-energy producer prices firmed 1.1% in the year to December, while energy prices fell by 0.7% from a year earlier. French PPI figures had been due but were postponed because of a labor strike affecting its measurement.

Japanese officials said it conducted no intervention in January and hasn’t done any since March 2004. There were reports from European sources of a push to secure greater G-7 cooperation on foreign exchange matters to curb volatility. Finance ministers and central bankers will hold their first of three 2009 meetings on February 14th in Rome.

Euroland reported a rise in unemployment to a 25-month high of 8.0% last month from 7.9% in November and 7.2% in December 2007.

The Flash preliminary CPI indication for Euroland showed a drop to 1.1% in January, lowest since July 1999, from 1.6% in December and a peak of 4.0% last July. ECB officials are likely to pay greater attention to the perils of deflation.

Norwegian real retail sales growth of 0.1% m/m and 2.3% from December 2007 were better than expected. German real wholesale sales grew 6.1% last month but dipped 0.2% after adjusting for variation in the number of working days.

Analysts look for U.S. real GDP to post a 5-6% saar decline in 4Q. ECI figures and monthly Canadian GDP data are also due at 13:30 GMT. Later today arrive midwestern PMI’s and the Michigan consumer sentiment survey.

Copyright 2009 Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.


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