New Overnight Market Developments: Sharp Wednesday Market Moves Reversed Partly

July 9, 2009

The dollar recovered 0.4% against the yen but has fallen back 0.9% against sterling and the Aussie dollar, 1.1% against the kiwi, and 0.7% relative to the Swissy, euro and Canadian dollar.

The Dax, Cac40, and Ftse are higher by 1.4%, 1.1%, and 0.8% in Europe.  The Nikkei lost another 1.4%, but stocks closed flat in South Korea, Vietnam, Malaysia, Indonesia, and India.  Australian equities edged 0.1% lower.  Stocks in China firmed 1.3%.

The 10-year JGB yield is steady at 1.30%, while gilt and bund yields are somewhat lower.

Oil recovered 2.1%, holding above the psychological $60 level.  Gold climbed 0.6%, staying above $900.

The Bank of England decided not to make any changes of monetary policy, retaining a 0.5% Bank Rate and leaving its asset purchases total at Gbp 125 billion.  Some, including me, had thought the latter might have been raised to Gbp 150 billion.

Australia’s jobless rate rose a tenth to 5.8%, highest since October 2003 but still less than forecast.  Jobs fell 21.4K in June, about as expected.  A gauge of expected CPI inflation over the coming 12 months accelerated to 3.2% from 2.8% in June.

The Bank of Korea left its key policy rate at 2.0% as expected but pledged to retain its accommodative stance for the time being.

The G8 summit warned that it would be premature to reverse stimulus.  No formal comments were made about currencies, but a Japanese spokesperson complained that Japan does not need a yen rise now.  Japanese machine tool orders fell 73.1% in the year to June but rose 25.5% from May.

Germany reported an as-expected EUR 3.7 billion current account surplus in May, down from EUR 5.5 billion in April and EUR 8.1 billion in May 2008.  The seasonally adjusted trade surplus rose to EUR 10.3 billion from EUR 9.0 billion in April and a first-quarter average of EUR 8.2 billion per month.  Exports only firmed 0.3% after diving 44.2% at an annualized rate in the six months to April.  Imports fell 2.1% in May, continuing their sharp downtrend.  Both exports and imports were over 20% lower than in May 2008.

German consumer prices were confirmed to have risen 0.4% in June and by 0.1% from a year earlier.  In 1H09, the total CPI rose 0.9% at a seasonally adjusted rate, constrained by a 2.8% annualized decline in food.  Real manufacturing turnover in Germany sank 19% in the year to May, with drops of 14.6% in domestic turnover and 24% in the foreign component of the index.

Britain’s merchandise trade deficit narrowed from Gbp 7.137 billion in April to Gbp 6.263 billion in May, smallest since June 2006.  Export and import volumes each dropped about 4%.  The goods and services deficit in May of Gbp 2.168 billion was smaller than forecasts that such would be Gbp 2.8 billion.

Swedish consumer prices firmed 0.2% in June but fell 0.6% from June 2008.  Dutch consumer prices slid 0.3% in June, cutting the 12-month increase to 1.4% from 1.6% in May and 2.6% a year earlier.  Czech consumer prices were unchanged in June and posted a 12-month rise of 1.2%, lowest since end-2003.  Irish consumer prices slipped 0.3% last month and by 5.4% on year, but such fell just 1.6% excluding falling mortgage interest costs.

Malaysian industrial output rose 1.6% in May but dropped 11.1% from a year earlier.  Pakistani CPI inflation eased from 14.4% in May to 13.1% in June, a 16-month low.  Consumer confidence in Thailand improved with a reading of 65.4 in June after a 7-year low of 64.3 in May.

Mining production in South Africa fell 14.5% in the year to May, deeper than the 10.6% on-year drop in April.

Hungary‘s January-May trade surplus of EUR 1.53 billion was 5.1 times wider than a year earlier.

Central banks in the Philippines, Chile, Colombia, and Peru will announces interest rate decisions later today.  Scheduled U.S. data include wholesale inventories and weekly jobless claims.

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


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