New Overnight Developments Abroad: Obama Comments on Dollar

March 25, 2009

In response to a question about China’s call for a global currency at last night’s press conference, President Obama asserted, “I would just point out the dollar is extraordinarily strong right now” and said he saw no need for a global currency.  The dollar lost 0.4% overnight against the yen and Swiss franc and 0.3% relative to the euro and Australian dollar. The dollar is 0.5% firmer against sterling, up 0.1% against the Canadian dollar and unchanged against the kiwi.

Stocks are narrowly mixed, up 2.5% in India but down 2.1% in China.  The Nikkei edged 0.1% lower, and in Europe the Dax shows no change.

Japan’s auction of 2-year JGB’s was well-subscribed.  The 10-year yield firmed 2.5 basis points to 1.285%.

Oil eased 2.4% to $52.70 per barrel, as Obama pressed onward for investment in fuel alternatives. Gold is unchanged at $926 per ounce.

The IFO German business climate index fell to 82.1, lowest since November 1982, from 82.6 in February and 104.6 a year ago.  Expectations posted a third straight rise to 81.6, but current conditions dropped 1.6 points to 82.7. The Institute said a turning point in the business cycle has not been reached and urged the ECB to cut rates further.

EU President Juncker parried Obama’s call for more fiscal stimulus but does not see a global recovery in growth until end-2010.

Japanese exports and imports posted massive on-year declines in February of 49.4% and 43.0%.  Export weakness was broadly diversified with drops of 46.3% to Asia, 58.4% to the United States, and 52.9% to Western Europe.  The unadjusted trade position returned to surplus (Y82 billion) for the first time in five months but remained in the red on a seasonally adjusted basis.

Italian consumer confidence relapsed much more sharply than expected, falling 4.2 points to 99.8 in March after improving from 99.6 in December.

New Zealand consumer confidence dropped to 96.0 this quarter from 101.3 in 4Q08.  South Korean consumer sentiment dipped to 84 from 85 in February.

Central bankers from Japan (Yamaguchi), the ECB (Gonzalez-Paramo), and Australia (Stevens) would not rule out further cuts in interest rates.  But BOJ Governor Shirakawa said the BOJ does not intend to underwrite JGB’s. Stevens denied that monetary policy is losing effectiveness.

Consumer prices in South Africa accelerated to a 12-month advance of 8.6% from 8.1% in January.

Sweden’s trade surplus widened 42% to SEK 9.5 billion in February from SEK 6.7 billion in January and exports rose 4%.

Imports in the Philippines fell 34.5% in the year to January.

British average weekly earnings posted a 12-month decline of 2.2% in January.

Central banks holding interest rate meetings in Poland and Norway are likely to announce further rate cuts today.

The United States releases data for durable goods orders, new home sales, and energy inventories today.  Janet Yellen and Sandra Pianalto of the Fed speak today.

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


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