New Overnight Developments Abroad: Dollar Stronger

September 10, 2009

The U.S. dollar rose 0.8% against the Australian dollar, 0.6% relative to the Canadian dollar, 0.4% against the kiwi, and 0.2% against sterling, the yen, the euro and the Swiss franc.  The South African central bank governor said the rand’s recent rally might be somewhat overdone.

Stocks were mostly higher in the Pacific Rim, gaining 2.0% in Japan, 2.3% in South Korea, 1.2% in Singapore, and 1.1% in Australia and Hong Kong.

But in Europe, the Ftse and Paris Cac have eased 0.4%, and the Dax is flat.

Gold retreated further below $1000, dropping 1.2% to $985.90 per ounce.  Oil firmed 0.3% to $71.49.

The ten-year JGB yield is unchanged at 1.33%.

The Reserve Bank of New Zealand kept its cash rate at 2.5% and retained an easing policy bias.  Statement was dovish in tone.

The Bank of Korea left its benchmark rate at 2.0% but suggested that consideration of a rate hike is already underway.

The Bank of England left its Bank Rate at 0.5% and made no change to its Gbp 175 billion asset purchase plan, which will be completed in two months.  A short statement indicated that minutes of the meeting will be released on September 23rd.

President Obama implored Congress to act on health care reform.  While pundits gave his speech good reviews, Congress’ reaction was highly partisan.

Australian jobs fell 27.1K in August, almost twice as much as forecast and reversing nearly all of July’s surprising 33.7K increase.  Jobs fell in 3 of the last 4 months.  The unemployment rate was 5.8%, same as in June and July.  Expected Australian inflation remained steady in September, perhaps dampening the urgency of monetary tightening somewhat.

Japanese stock and bond transactions generated a 552 billion yen inflow last week, a near fivefold increase and suggesting asset repatriations ahead of the fiscal year midpoint.  Look for more inflows in September.

Japanese domestic corporate goods prices were unchanged in August and 8.5% lower than a year earlier.  Export prices rose 1.1% from July but fell 14.5% on year.  Import prices tumbled 34.6% in the year to August, on lower commodity costs and a stronger yen.

Japanese core domestic machinery orders plunged 9.3% in July, three times more than expected, and were 34.8% lower than in July 2008.  Such started the third quarter some 4.6% lower than the 2Q average level.  Government and foreign machinery orders climbed 25.2% and 21.8% from June, however, resulting in a 7.5% increase of total machinery orders on the month.

Italian real GDP growth in 2Q09 was confirmed at -0.5% from 1Q and -6.0% from 2Q08.  These results were unrevised from preliminary indications.

The British Halifax house price index recorded a second straight rise, gaining 0.8% in August after a 1.1% increase in July.  Such fell by 10.1% on year, less than the 12-month drop of 12.1% in July.

Britain’s National Institute of Economic and Social Research estimates that real GDP rose 0.2% in June-August, the first 3-month advance in 15 months.  NIESR officials believe the recession ended in May.

France’s trade deficit of EUR 1.3 billion in July was only a third as much as forecast.  The year-to-July deficit of EUR 24.9 billion was 19.5% smaller than a year earlier.  French industrial production firmed 0.1% in July, much less than forecast as drops in construction, oil, and transportation equipment outweighed the gain in food.  Non-energy industrial output went up 0.6%.  Overall industrial production was 13.0% less than in July 2009.  French jobs fell 0.6% last quarter and by 2.1% from 2Q08.

Portuguese consumer prices eased 0.3% in August and fell 1.3% over the past 12 months.  Irish consumer prices on a EU harmonized basis firmed 0.2% last month but slumped 2.4% from a year earlier.

Swedish consumer prices firmed 0.2% in August and posted a 12-month drop of 0.8% after falling 0.9% in the year to July.  Norwegian consumer prices slid by 0.3% in August and rose less from a year earlier (2.3%) than had been anticipated.  Norway’s PPI went up 4.9% on the month but was 1.2% lower than in August 2008.

Turkish real GDP sank only 7.0% in the year to 2Q09, half as much as in the year to 1Q09 which suggests positive quarterly growth occurred.  However, capacity usage weakened to 69.7% in August from 72.3% in July.

Goldman Sachs analysts expect Russia’s central bank to cut rates tomorrow.

Malaysian industrial production rose 7.1% in July but fell by 8.4% from a year earlier.

Italian exports to non-EU countries fell 17.1% in the year to July, just half as much as the 34.9% drop in imports.

Mersch of the ECB expects a gradual and irregular recovery from here.

Chinese Premier Wen indicated that policy stimulus will continue.

The United States and Canada release trade figures at 12:30 GMT.  The U.S. also announces weekly jobless insurance claims then.  At 13:00, the Bank of Canada will reveal its latest monetary policy decisions and thinking.

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


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