New Overnight Developments Abroad: Dollar and Yen Declined Further

May 1, 2009

Many financial markets closed for May Day including China, Hong Kong, India, South Korea, Malaysia, Singapore, Taiwan, Thailand, Vietnam, Germany, France, Italy, Switzerland, Sweden, Argentina, Brazil, and Mexico.  Japan, Britain, and the United States are open, but more than 300 U.S. schools will be closed for the swine flu scare.  Eleven countries now report cases of the disease.

The yen fell another 0.7% against the dollar, inching closer to 100.  The dollar otherwise fell as risk aversion continued to recede, posting losses of 1.2% against the kiwi, 0.9% against the Australian dollar, 0.8% relative to sterling, 0.7% versus the Canadian dollar and 0.4% against the euro and Swiss franc.

The Nikkei advanced 1.7%, while the 10-year JGB fell 4.5 basis points to a one-month low of 1.395%. Stocks jumped 6.8% in Indonesia but are down 0.1% in Britain.  Oil and gold each dropped about 1% to $50.58/barrel and $882.20/ounce, respectively.

Japanese core CPI returned to the red, dropping 0.1% in the year to March.  Core-core inflation (excluding energy as well as seasonal food) posted on-year declines of 0.3% in the nation (March) and 0.6% in Tokyo (April).  Total CPI inflation slid 0.2% y/y in Tokyo and by 0.3% in the nation.  Japan’s unemployment rate rose to 4.8% in March, most since August 2004, from 4.4% in February and 4.1% in January.  The job offers ratio sank to a 0.52, lowest since April 2002 (record low was 0.46).

Japanese real household spending slid 0.2% m/m in March, its third drop in four months, but by a smaller-than-forecast 0.4% from March 2008. Real disposable incomes dropped 3.3% year-over-year.  Total wage earnings sank 3.7% in the year to March, its greatest on-year drop since July 2002 as overtime pay plunged 20.8%.  Motor vehicle sales decreased 23.0% on year in April and by 23.6% in January-April.

Japanese stock and bond transactions generated a Y 955 billion outflow last week, down from a Y 1562 billion net outflow in the week to April 18th.

The Central Bank of Colombia cut its key interest rate late yesterday to 6% from 7%, which was an expected move.

Australia’s factory PMI worsened in March to 30.1 from 33.2 in February, as orders plunged to 26.7 from 40.6.  The consensus of analysts, nonetheless, is that the Reserve Bank will not cut its cash rate further next week.

South Korean CPI inflation fell in April to 3.6%, a 14-month low, and 4.2% on the core index, an 11-month low.  The trade surplus widened to a record $6.02 billion in April, as exports rose 7.9% on month.  Compared to April 2008, exports fell 19.0%, only about half as much as the 35.6% decline in imports.

Indonesian consumer price inflation slowed to 7.3% in April, a 16-month low, from 7.9% in March. Bank Indonesia is likely to cut rates next week.   As in South Korea, new trade data showed lessening distress, as the surplus widened 30% on month and exports (-28.9%) and imports (-33.9%) fell by less than expected from a year earlier.

India posted a $4.06 billion trade deficit in March, with both exports and imports off more than 30% from a year earlier.  The deficit in fiscal 2008/09 increased 34.6% to $119 billion.  Thai consumer prices fell 0.9% in the year to April.

China’s manufacturing PMI recorded a fifth consecutive rise, printing at 53.5 in April versus 52.4 in March and 38.8 in November.  The sub-indices for orders and output  went up 2 points and 0.5 points to 56.6 and 57.4. The prices sub-index also climbed above 50 compared to 26.6 back in November.

British bank lending data reflected continuing tightness despite quantitative easing.  Net mortgage lending in March was 46.5% less than in February and 87.7% below its year-earlier level.  M4 growth slowed to 17.8% y/y from 18.3% in February.  M4 growth other than to other financial institutions slowed to a record low of 2.5%.

The British PMI in manufacturing improved to 42.9 in April from 39.5 in March and a record low 34.9 in February.

U.S. stress test results will be revealed late next week, rather than on Monday as scheduled originally.  Supreme Court Justice Souter will retire in June.

At 14:00 GMT, the U.S. releases the PMI-manufacturing index, factory orders, and the U. Michigan index of consumer sentiment.  Domestic auto sales for April also arrive today.  British markets are closed for a bank holiday next Monday.

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


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