New Overnight Developments Abroad: Dollar Consolidating after Monday-Tuesday Drop

September 9, 2009

The dollar firmed 0.3% against the yen and Aussie dollar and edged up 0.1% versus the Canadian dollar, but the U.S. currency slipped another 0.1% against sterling and the euro.  The Swiss franc is steady.

Asian stocks closed mixed, with those in Japan and the Philippines down 0.8%.  Bourses also fell 1.0% in Hong Kong, 0.9% in Taiwan, 0.7% in South Korea and 0.5% in Malaysia.  Gains were posted in China of 0.8%, Indonesia of 0.5%, India of 0.4%, and Thailand of 0.6%.  Plus in Europe, the German Dax, Paris Cac and British Ftse have increased by 0.4% to 0.6%.

Gold settled back under $1000 to trade 0.4% lower at $995.80 per ounce.  Oil is steady but above $70 at $71.09 per barrel.

The ten-year JGB yield eased a basis point to 1.33%, and the 2-year JGB touched its lowest level since October 2005 after yesterday’s well-bid five-year auction.  Sakakibara, also known as Mr Yen, predicted the 10-year yield will remain under 2% even if Japan’s fiscal deficit increases.  He also opined that the dollar will remain the main reserve currency for another 20 years.

Japan’s index of leading economic indicators and the coincident index printed somewhat higher than expected in July at 83.0 and 89.6.  Japanese machine tool orders fell another 6.5% in August and were down 71.3% from a year earlier.

Announced Australian data were mixed, leaving the possibility open for a rate hike on October 6 but November or December looking like more likely times for the Reserve Bank to enact its first increase.

  • Consumer confidence shot up another 5.2%, bringing its gain over the four months to September to 34.4%.
  • Mortgage finance fell 2.0% in July, the most for any month since June 2008 and larger than the projected setback.
  • Retail sales fell 1.0% in July instead of firming 0.5% as forecast.  Such also fell by 0.8% in June but were up 5.2% from July 2008.
  • The leading employment indicator improved for the third straight month.  While still under zero, the trend suggests better jobs growth ahead.

British shop prices slid 0.1% in the year to August according to the British Retail Consortium.  This was the first on-year drop since February 2007.

The Nationwide index of U.K. consumer confidence improved to a 15-month high of 63 in August from 61 in July.

The U.K. merchandise trade deficit narrowed 0.6% between June and July but at Gbp 6.479 billion exceeded forecasts.  The volume of exports and imports each recorded their largest advances in 18 months.  The goods and services deficit widened to Gbp 2.447 billion from Gbp 2.366 billion in June.

Final German CPI figures for August confirmed the preliminary indications of a 0.2% uptick compared to July.  On-year comparisons showed no change after a drop of 0.7% in the year to July.  Energy prices were higher on the month but fell 7.0% from a year earlier.  German corporate and personal insolvencies posted gains in the year to June of 15.9% and 4.9%.

Czech consumer prices in August slid 0.2% and rose just 0.2% from August 2008.

Swedish industrial output slid 0.5% in July and fell 19.9% from a year earlier.  Orders, in contrast, posted a monthly rebound of 8.3%, cutting its 12-month drop to 16.5% from 21.5%.

Hungary’s trade swung to a greater-than-expected surplus of EUR 747 million in July from a deficit of EU 424 million in July 2008.  The year-to-July balance was in deficit by EUR 2.6 billion, however.

As expected, the Central Bank of Chile left its TPM rate at 0.5% and said unconventional liquidity-enhancing facilities will continue to operate.

Business sentiment in South Africa plumbed to its lowest level of the decade with a print of 23 in 3Q09 after 26 in 2Q09.

Bank of Japan policymaker Suda said Japanese corporate financing is improving, so the need for unconventional measures to promote corporate borrowing is lessening.  Bank of France Governor and ECB Council member Noyer warned that growth prospects remain fragile, so the ECB must proceed carefully.

The Fed Beige Book and Canadian housing starts will be released today.

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


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