New Overnight Developments Abroad: Euroland Data Less Bad

April 23, 2009

The dollar fell 0.7% against the kiwi, 0.6% against the Australian dollar, 0.4% against sterling and the euro, and 0.3% against the Canadian dollar. But the buck also rose 0.3% against the yen and Swiss franc.  This kind of currency pattern signifies less risk aversion today. So does a rise in most stock markets.

In the Pacific Rim, stocks climbed 1.4% in Japan, 2.3% in Hong Kong, 1.2% in Thailand, 2.9% in India, 1.0% in Malaysia, 0.9% in Singapore, 2.0% in Australia, and 0.7% in China.  In Europe, the Ftse is up 0.6%, and the Paris Cac gained 0.3%.  The Dax, an exception, is trading off 0.1%.

Oil firmed 0.6% to $49.16 per barrel, and gold is steady at $893.40 per ounce.

The 10-year JGB yield is steady at 1.44%, while sovereign debt yields have risen in Europe and North America.

Euroland’s current account deficit in February was 34% smaller than in January on a seasonally adjusted basis at EUR 8.1 billion. The Basis Balance (current account plus direct and portfolio investment flows) improved to a surplus of EUR 45.7 billion, thanks to portfolio inflows equal to EUR 61.2 billion.

Euroland industrial orders, which sank at a 55.7% annualized rate in 4Q08, dropped by only 0.6% in February.  January’s decline was revised to 2.0% from 3.4% reported last month.  Even so, orders plunged 34.5% in the year to February.  Analysts had projected a further 2.4% drop in orders for February.

Preliminary PMI readings from Euroland, Germany, and France were better than expected.  Euroland’s scores rose 2.2 points to 40.5 on the composite index, 2.8 points to 36.7 on the factory index, and 2.1 points to 43.1 on the index for services.  Germany posted readings in April of 39.7 on the composite, 33.0 for manufacturing, and 43.5 in services, up from 38.3, 32.4, and 42.3.  The French composite index printed at 43.5 in April versus 41.4 in March, with manufacturing up 3.5 points at 40.0 and services up 2.6 points at 46.2.  All readings remain below 50, connoting contraction, but the rate of decline has flattened a bit.

The French government statistical agency, INSEE, also reported a 3-point improvement in business sentiment to 71, the first advance since March 2008. A score of 69 was anticipated.

Germany’s six economic institutes released a new collective semi-annual forecast, predicting a 6.0% plunge in real GDP, led by drops of 16.4% in equipment investment and 22.6% in exports.  They look for a government deficit of 3.7% of GDP in 2009, then rising to 5.5% in 2010. Consumer price inflation will hover near zero.

Australian motor vehicle sales fell 3.2% in May and by 22.6% from Mary 2008.

Japanese automakers announced global motor vehicle production losses between March 2008 and March 2009 of 49.9% at Toyota, 57.3% at Mitsubishi, 44.9% at Nissan, and 36.4% at Honda.

The Hong Kong Monetary Authority intervened in three rounds to keep their currency from rising above 7.75 per U.S. dollar.

The Russian central bank cut its key refinancing rate for the first time since 2007, lowering such by 50 basis points to 12.5%.  Officials hinted there will be more reductions and urged banks to pass on the cut.

In Britain, the CBI business group’s industrial trends monthly survey showed a somewhat worse-than-expected orders index of -57 after -58 in March and -35 at end-2008.

Swedish unemployment increased to 8.3% last month from 8.0% in February.

The Swiss ZEW index of investor sentiment improved sharply to -27.7 in April from -57.1 in March.

Informed sources claim Japan’s forecast of GDP growth in fiscal 2009 due Monday will be around minus 3.3%.  BOJ forecasts are also due next week. Japanese stock and bond transactions generated a Y 1564 billion capital inflow last week.

The Bank of Canada releases its semi-annual monetary policy report, including a framework for possible quantitative easing, at 14:30 GMT today. U.S. jobless claims are due at 12:30 GMT, and existing home sales figures arrive at 14:00 GMT.

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


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