New Overnight Developments Abroad: Yen Nearing 90.0/$ and Gold Back Above $1000/Ounce

September 11, 2009

The dollar lost 1% against the yen and is below 91.  The greenback also has eased 0.3% against the Canadian dollar, 0.2% relative to the euro, kiwi and pound, and 0.1% against the Swiss franc.

Stocks gained in Asia (except for a 0.7% drop in Japan) and Europe.  Chinese shares advanced 2.4% on better-than-expected data.  Stocks also rose 1.4% in Vietnam, 1.8% in Sri Lanka, 0.7% in Thailand, 0.6% in Malaysia, 0.6% in Australia, 0.8% in France, 0.7% in Britain, and 0.6% in Germany.

Bond yields are softer including a 2-basis point dip to 1.31% in the 10-year JGB.

Gold climbed 0.5% to $1001.7, while oil eased 0.3% to $71.74 per barrel.

Japanese consumer confidence extended its recovery to 40.1 in August, highest since October 2007, from 39.0 in July, 32.4 in April, and 26.2 last December.

But Japanese 2Q09 GDP growth got revised downward to 2.3% at an annualized rate (saar) from 3.7% reported initially.  GDP fell 7.2% in the year since 2Q08.  During the second quarter of this year, business investment, residential spending, and imports slumped 17.9%, 33.0%, and 18.9% saar, while consumption, public investment, and exports went up by 3.0%, 33.6%, and 28.1% saar.  Inventories exerted a significant drag on growth.

China released several indicators for August:

  • New yuan loans in August amounted to 410.4 billion yuan, 35% more than expected and 34.1% greater than a year earlier.
  • Reserves now surpass $2.1 trillion.
  • Industrial production climbed 12.3% on year versus an expected 11.7% increase.
  • Retail sales went up 15.4% from August 2008, two-tenths more than forecast.
  • Fixed asset investment soared 33% on year in January-August.
  • Consumer price inflation of minus 1.2% was below zero for the seventh straight month.
  • Producer prices fell 7.9% compared to a forecast of 7.8% and an on-year drop of 8.2% in July.
  • The trade surplus of $15.7 billion was 19% greater than forecast.
  • However, on-year declines in exports of 23.4% and imports of 17.0% were each greater than in July and above analyst expectations.
  • Investment in real estate accelerated to 14.7% over the first eight months of 2009

Indian industrial production rose 6.8% in the year to July, similar to the 7.0% rise in the year to June.

Food prices in New Zealand fell 0.9% in August but rose 4.6% from a year earlier.

The minority Conservative government in Canada, which faces a possible no-confidence vote next week, revised up the projected FY09/10 fiscal deficit to C$ 55.9 billion from C$ 50.2 billion predicted three months ago and an original estimate last February of C$ 33.7 billion.  The government projects negative GDP growth this year of 2.3% but positive growth of 2.9% per annum over the ensuing five years.

Peru’s central bank retained a 1.25% benchmark interest rate as expected after having eased earlier in 2009 by 525 basis points.

Italian industrial production firmed 1.0% in July, 2-1/2 times greater than expected, but still fell 18.2% from a year earlier.

British producer output prices climbed 0.2% in August and fell just 0.4% on year after a 1.3% drop in the year to July.  Core PPI-O rose 0.7% from a year before.  Producer input prices rebounded 2.2% after dropping 1.1% in July.  The PPI-I index declined 7.5% from a year earlier.

German wholesale prices increased 0.7% in August following a 0.5% drop in July, cutting the on-year decline to 8.3% from 10.6%.

Swedish real GDP growth in the second quarter was revised upward by two-tenths to a 0.2% quarterly rise and a 6.0% on-year decline.

Czech industrial production plunged 18.2% in the year to July.  The Czech current account deficit in July was 83.7% narrower than in June. Hungarian consumer price inflation edged a tenth lower to 5.0% in August.  Excluding the impact of higher taxes, such was 1.2%.

Spanish consumer prices in August firmed 0.3% from July but fell 0.8% from August 2008.

The U.S. will release import prices, the U. Michigan consumer sentiment index, and the monthly federal budget figures later today, while Canada announces house price inflation.

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


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