New Overnight Developments Abroad: Sterling Above $1.6000

May 27, 2009

The dollar fell 0.6% against the pound to $1.6029, the first time since November that sterling has traded above $1.60.

The Chinese yuan softened to its weakest level since April 14 ahead of Geithner’s visit to China.

The dollar also lost 0.5% to an 8-month low against the Canadian dollar, which has been buoyed by another 1% rise in oil prices to $63.05/barrel.  But the U.S. currency gained 0.6% relative to the New Zealand kiwi, 0.3% against the yen, 0.2% against the euro and 0.1% versus the Swissy and Aussie dollar.

In Asia, stocks soared 5.3% in Hong Kong, 3.8% in India, 2.3% in Thailand, 2.0% in The Philippines, 1.5% in China and 1.4% in Japan.  Equities also firmed in Australia and New Zealand, and in Europe the Paris Cac, German Dax and British Ftse show gains of 0.9%, 0.7%, and 0.3%.

Data today (see below) have been consistent for the most part with the view that the global recession is moderating rapidly.

Government bond yields rose 3 basis points to 1.48% in Japan and are higher in Europe, Canada, and Australia, too.

Minutes from the Bank of Japan meeting at end-April showed policymakers content not to introduce further stimulus now and expecting a gradual recovery to emerge.  One member of the Board talked about devising an exit strategy for when recovery does in fact begin.

The Japanese customs trade was in surplus (Y69 billion) last month. Real exports fell 35.8% y/y after posting drops of more than 40% in each month of 1Q09. The seasonally adjusted deficit was unchanged at Y 52 billion.

Australian real construction fell 3.7% in the first quarter, posting on-year growth of just 3.5% after 14.5% in the fourth quarter of 2008.  The index of leading economic indicators went up for the first time in seven months, a gain in March of 0.3%. Skilled job vacancies plunged 61.8% on year in May.

Business sentiment in New Zealand improved to +1.9 in May from minus 14.5 in April.

Household credit in South Korea slowed sharply to on-year growth of 6.7% in the first quarter from 9.1% in 4Q08.  Taiwan’s leading economic index rose 2.6% last month, its third straight improvement.

Malaysian GDP growth printed at negative 6.2% on year in the first quarter compared to an expectation of -3.8%.

South African consumer price inflation eased a tenth to 8.4% in April.

German CPI inflation was again lower than expected in May.  Four of six states reported a monthly dip of 0.1%, and two had negative on-year changes.

French business sentiment firmed to 72 in May from 71 in April and 68 in March.  Consumer sentiment ticked up a point to a 13-month high of minus 40.

Italian consumer confidence was unchanged at 104.9 in May, failing to rise marginally as forecast.  Hourly wage growth remained at 3.5% on year in April.

According to the British Banking Association, mortgage approvals tumbled 15.5% in the year to April, and net mortgage loans sank to their weakest level since March 2001.  Producer prices in Britain’s service sector rose less than 1% between 1Q08 and 1Q09.

The Swedish Riksbank borrowed foreign currencies to augment its reserves by SKR 100 billion, a move that weighed mildly on the krona.  Swedish consumer confidence of minus 11 in May was at the highest level since mid-2008.  The Swedish economic sentiment index improved sharply to 77 in May from 69.7 in April.  Business sentiment among manufacturers improved four points, somewhat more than forecast, to -34 in May.

In Finland, consumer sentiment went up 6.2 points to 7.2 in May, while business sentiment slid a point to minus 33.  In Spain, retail sales fell 7.5% in the year to April after on-year drops of 8.2% in March and 9.1% in February.

The U.S. releases weekly chain store stales and petroleum inventory data today, as well as existing home sales and the FHFA home price index.

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


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