New Overnight Developments Abroad: Japanese Yen Policy Less Clear

September 18, 2009

The dollar has appreciated 0.6% against sterling and the Canadian dollar, 0.3% relative to the Australian dollar and yen, and 0.2% against the euro and Swissy.

Stocks fell 3.6% in China, 0.9% in Singapore, 0.7% in Hong Kong and Japan, and 0.5% in Australia.  But equities rose in Vietnam, the Philippines, Indonesia, Taiwan, Thailand and South Korea.  European stocks are little changed.

Bund and gilt yields are lower.  The 10-year JGB is steady at 1.345%.

Oil fell 0.8% to $71.87 per barrel, while gold edged up 0.2% to $1015.80 per ounce.

Japan’s second biggest consumer lender, Aiful, has requested a delay on some debt repayments.

The new Japanese finance minister, Fujii, said he doesn’t want to be labeled as a strong yen man, that economic conditions should set exchange rates, that Japan’s economy remains fragile, and that he has no comment on specific yen levels.  His remarks in previous days had markets chattering that he would be promoting a strengthening yen.   This backtracking is similar to a pattern when he was finance minister in 1993-4 — see my Tuesday post on that period.

Japan’s index of leading  and coincident economic indicators printed in July at  82.5 and 89.8, both 8-month highs.  Bank of Japan Deputy Governor Yamaguchi said the economy has entered a more positive situation but that significant downside risks persist.

German producer prices rose more than expected last month, gaining 0.5% from July and dropping 6.9% on year after a 7.8% decline in the year to July.  Energy prices jumped 1.1%, while all other producer prices increased 0.3%.

Euroland’s current account swung into surplus in July for the first month of 2009, printing at EUR 6.6 billion following a EUR 4.3 billion deficit in June.  The unadjusted January-July current account was in deficit by EUR 102.5 billion compared to a EUR 42.2 billion deficit a year earlier.

Dutch consumer confidence held steady in September at minus 17.  Belgian September consumer confidence was steady after improving six points to minus 11 in August from minus 17 in July and a low point of -25 last December. 

Newly released British data were disappointing.

  • M4 growth slowed to 12.6% in the year to August, lowest in a year and suggesting scant boost from quantitative easing.
  • The Bank of England survey on lending found no discernible lift in lending to firms.
  • According to the Council of Mortgage Lenders, gross mortgage loans were 13.1% lower in August than July and down 36.7% from August 2008.
  • Public sector net borrowings of Gbp 16.1 billion represented a record high for the month of August, and the April-August borrowings of Gbp 65.3 billion was 150% greater than the total in the first five months of the previous fiscal year.  Debt to GDP has risen to 57.5% from 44.0% in August 2008.
  • The only bright spot was an increase in mortgage approvals reported by the Bank of England to 57K in August form 53K in July.

French wages rose 0.4% in the second quarter, same as the preliminary indication of such.  Spanish labor costs were 3.9% higher in 2Q than a year earlier.

The Bank of Mexico announces its latest monetary policy decision today and is not expected to changed its 4.5% key rate.

Canadian wholesale sales figures will be released at 12:30 GMT.  U.S. scheduled statistics include the U of Michigan consumer sentiment index and wholesale inventories.

Japanese markets are closed next Monday for Respect for the Aged day, next Tuesday for a national holiday, and next Wednesday for the Autumnal Equinox.

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


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