New Overnight Developments Abroad: Dollar Slightly Firmer

September 15, 2009

The dollar has gained 0.5% against sterling, 0.3% against the yen, Canadian dollar, Swiss franc and Aussie dollar, and by 0.1% against the euro.  Kiwi is steady.

The South African rand advanced to a 13-month high of 7.386 per dollar after the finance minister said the government did not plan to manipulate the currency.

Stocks closed mixed in the Pacific Rim, with increases of 0.2% in Japan, 0.3% in China, 1.2% in Taiwan, 1.1% in South Korea, 1.6% in Indonesia, and 1.5% in India offsetting declines of 1.2% in the Philippines, 0.9% in Sri Lanka, 0.3% in Hong Kong, 0.5% in Pakistan, and 0.9% in New Zealand.  In Europe, likewise, the Paris Cac has edged 0.1% higher but the German Dax and British Ftse show drops of 0.5% and 0.2%.

Ten-year bunds, gilts, and JGB’s are two, one, and one basis points higher.

Oil climbed back above $69, gaining 0.5% to $69.18 per barrel. Gold slid back under $1000, dipping 0.3% to $998.20 per ounce.

Minutes from the Reserve Bank of Australia’s meeting at the start of this month stressed a balancing act between preventing future inflation and sustaining the recovery.  On the whole, investors are concluding that maybe rates will not be lifted quite as soon as thought.  It was later reported that Australian housing starts unexpectedly fell 3.7% last quarter instead of rising 1% as predicted.

New Zealand’s factory activity index fell 4.8% in the second quarter.

The German ZEW index of investor sentiment rose less than anticipated in September.  The expectations component was 57.7, still best since April 2006, after 56.1 in August and 39.5 in July.  The current situation component improved to minus 74 from -77.2 in August and -89.3 in July.  The ZEW expectations index for Euroland advanced 4.7 points to 59.6, while the current situation component climbed 4.2 points to minus 77.9.

Labor costs in the euro area unexpectedly accelerated and sharply too, printing an on-year increase of 4.0% in 2Q09, almost as much as the 4.2% record gain in 4Q08 and up from 3.6% in the first quarter.  Labor cost growth climbed in Spain and France but eased in Germany.

British August consumer price inflation again surpassed expectations, decelerating to 1.6%, not 1.4%, from 1.8% in July and June.  Consumer prices rose 0.4% on the month.  The 12-month increases of the RPI and RPIX indices were -1.3% and +1.4%, respectively.  Core CPI was 1.8% versus a projected 1.6%.

Britain’s Royal Institute of Chartered Surveyors released the August house price index of +10.7 after -5.7 in July.  Such was positive for the first time since July 2007 and the best reading since May 2007.  Another house price index, that from the DCLG, climbed more than expected to -8.3% from -10.7% in June.

Swiss industrial production rose 2.7% in the second quarter. Dutch retail sales fell 3.6% in the year to July.

Czech producer prices firmed 0.2% in August but fell 5.1% from a year earlier after a 12-month drop of 4.9% in July.

Home sales in Spain dropped 20% in the year to July, less than declines of 26% in June and 32% in May.

French consumer prices were lifted by a 1.9% rebound in energy costs.  The total CPI firmed 0.5% from July and dropped 0.2% from August 2008, which was less than the 0.7% decline in the year to July.  The French current account deficit narrowed to EUR 1.2 billion in July from EUR 3.3 billion in June.

European car sales rose 3.0% in the year to August after a gain of 2.8% in the year to July.

Japanese machine tool orders sank 71.5% in the year to August.

Singapore’s retail sales in July were 9.8% less than a year earlier.

Today is a big day for data releases in North America.  The U.S. announces retail sales, producer prices, business inventories and the Empire State factory index.  Canada releases quarterly productivity and unit labor costs and monthly new motor vehicle sales.  Bernanke has a speaking engagement, and several British monetary policymakers testify about the latest staffing forecasts.

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


Comments are closed.