New Overnight Developments Abroad: European Currencies Weaker

April 17, 2009

The dollar advanced 1.5% against the Swiss franc and 0.9% against sterling and the euro.  Comments by Trichet failed to dispel perceptions of a split among ECB policymakers over quantitative easing and how low interest rates can go.

The dollar otherwise edged up 0.2% against the Canadian dollar and 0.1% relative to the yen, while holding unchanged against the Australian dollar and kiwi.

Stock markets are mostly stronger, with gains of 1.7% in Japan, 1.5% in Pakistan, 1.4% in the Philippines, 0.7% in India, 0.9% in Thailand, and 0.6% in Indonesia.  In Europe, the Paris Cac, German Dax, and British Ftse are trading 1.0%, 0.7% and 0.4% higher.

Sovereign bond yields have moved little.  The 10-year JGB is up 0.5 basis points at 1.455%.

Oil fell 0.5% and remains below $50 at $49.74/barrel.  Gold lost 0.9% and remains under $900 at $872.20 per ounce.

New Zealand consumer price inflation slowed to 3.0% last quarter from 3.4% on year in 4Q08. Results were as forecast.

Australian export prices plunged 4.6% last quarter but rose 42.8% on year.  Import prices, down 2.8%, fell much more sharply than anticipated due to lower oil costs but still rose 14.6% from 1Q08.  A weaker terms of trade (export/import price ratio) is now depressing Australian growth.

Japanese consumer confidence firmed for a third straight time to a five-month high of 28.9, leading officials to upgrade their assessment of consumer sentiment, acknowledging that such remains very depressed but is no longer worsening.  The low of 26.2 was hit in December.

Japan’s Tertiary index for service-sector activity dropped 0.8% in February, more than reversing January’s 0.4% uptick, and was 6.1% lower than a year earlier.

The Bank of Japan held its quarterly meeting of branch managers and cut the assessment for seven of the country’s nine regions.  Governor Shirakawa voiced pessimism about domestic demand and financial conditions.  Government officials are proposing a plan to support share prices in an emergency. 

Euroland posted another seasonally adjusted trade deficit in February (EUR 4.0 billion after EUR 5.4 billion in January).  In the five months to February, exports and imports plunged at annualized rates of 45.9% and 43.5%.  In the year to February, unadjusted exports and imports declined by 24.0% and 21.4%.

Construction output in Euroland fell 1.8% in February and by 11.8% from a year earlier.

Norway’s trade surplus of NKR 30.3 billion in March was 23.5% smaller than in March 2008 but above February’s surplus of NKR 29.5 billion.

Italian industrial orders dropped 1.5% in February and by 32.7% from February 2008.  Industrial sales posted declines of 3.1% m/m and 23.9% y/y.

South Korean department store sales rose 4.5% in the year to March and 4.9% y/y in the first quarter after a 1.0% on-year advance in 4Q08.

Swiss real retail sales slumped 3.8% in the year to February and by 0.3% in Dec-Feb from Sept-Nov.

Germany’s Economics Ministry expects a bigger drop of GDP in the first quarter than recorded in the final quarter of 2008.

The contraction of home prices in Spain intensified last quarter, dropping 3% from 4Q and by 6.8% from a year earllier.

Austrian consumer prices firmed 0.7% in the year to February, and Finnish producer prices dropped 6.1% in the year to March.

Canadian consumer price inflation slowed to 1.2% in March from 1.4% in February despite an uptick in core to 2.0% from 1.9%.  Headline CPI and core CPI posted monthly increases of 0.2% and 0.3%.

Only the U. Michigan consumer sentiment index is due from the United States today.  The Bank of Mexico is holding an interest rate policy meeting and is expected to cut its benchmark further.

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


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