New Overnight Developments Abroad: Awaiting Bank of England and ECB Decisions

August 6, 2009

The dollar has firmed 0.5% against the kiwi, 0.4% against the yen, 0.2% versus the Canadian dollar and 0.1% against the euro and Swiss franc.  Sterling and the Aussie dollar are unchanged against the U.S. dollar.

Stocks are mostly but not entirely higher.  The Nikkei advanced 1.3%, and stocks in Europe are up 0.7% in Britain and France.  The Dax is 0.4% higher, and stocks closed up 2.0% in Hong Kong, 1.9% in Indonesia, and 1.4% in Thailand.  But equities also fell by 2.5% in India, 2.1% in China where speculation persists that bank lending will be reined in, and 1.6% in The Philippines.

10-year sovereign bond yields have ticked up a basis point in Germany, Britain and Japan.

Oil eased 0.4% but remains elevated at $71.71 per barrel.  Gold story is similar, a dip of 0.3% to $963.30 per ounce.

Investors await interest rate policy decisions from the Bank of England at 11:00 GMT and ECB at 11:45 GMT, followed by a press conference at 12:30 GMT.  No rate changes in offing.

In the meantime, a surprisingly robust 4.5% leap in German industrial orders in June was announced.  Market looked for a rise of 0.5% after May’s 4.4% jump.  German orders increased 27% at an annualized rate last quarter after diving 46.3% at an annualized rate in the first quarter.  Domestic orders in June only firmed another 0.2%, but foreign demand advanced 8.3%  including  12.5% jump in foreign orders for capital goods.

Japan’s index of leading economic indicators recorded a diffusion index of 70.0 in June, best since February 2006.  The coincident diffusion index of 77.8 was its highest since June 2006.

The National Institute of Economic and Social Research estimates that British GDP growth contracted 0.4% in the three months to July, half of the 0.8% drop in the three months to June.  In another sign that the recession is ending, the RICs Institutes projects a slight uptick of British house prices this year.

A story out of Japan quoting informed sources claims that the BOJ forecast for Fiscal 2011 ending in March 2012 will include another decline of consumer prices.  The forecast is due at the end of October.

Australia reported much better labor statistics than expected for July, with the jobless rate holding at 5.8% instead of climbing to 6.0% and employment increasing 32.2K, which more than reverses June’s drop of 22.5K.

Japanese stock and bond transactions generated a Y 172 billion outflow last week.

Unemployment in New Zealand jumped a full percentage point to 6.0% in 2Q09 from 5.0% in 1Q and 3.5% in 4Q07.

Italian industrial output produced a negative surprise in June, declining 1.2% instead of firming 0.4% as forecast.  Production fell 21.9% from June 2008.

Hungarian industrial production rose 1.9% in June on top of 2.6% in May but was 18.6% lower than in June 2008.  The trade surplus widened more than six-fold in the first half from 1H08.  The Czech trade surplus in June was 74% bigger than in May.

Greek consumer prices fell 0.7% in June and rose just 0.6% from a year earlier. Dutch consumer prices increased just 0.2% in the year to June.

British new car registrations recorded the first on-year increase in 15 months, rising 2.4%.  They were boosted by government incentives.

Central banks in the Czech Republic and Peru also announce interest rate decisions today.  Each is likely to cut rates.

U.S. jobless claims and monthly ICSC chain store sales get released today.

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


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