New Overnight Developments Abroad: Dollar Firms

October 9, 2009

The dollar has gained 0.6% against sterling and the kiwi, 0.5% relative to the yen, 0.4% against the Swiss franc, 0.3% against the euro and 0.1% versus the Aussie dollar.  The Canadian dollar was flat ahead of the releases of Canadian labor and trade statistics.

The reopened Chinese bourse shot up 5.3% in a catch-up move after a week’s closure.  There were other sharp equity rises in Asia: 1.9% in Japan, 1.8% in Vietnam, and 2.2% in South Korea.  But stocks also fell 1.2% in India, 0.4% in Indonesia, and 0.3% in Australia.  In Europe, the Dax and Cac40 are off 0.4%, and the British Ftse has drifted 0.2% lower.

Ten-year Treasury, JGB and Gilt yields rose two basis points.  The yield on 10-year bunds climbed three basis points.

Gold settled back 0.7% to $1048.90 per ounce.  Oil likewise eased 0.3% to $71.44 per barrel.

Fed Chairman Bernanke promised that U.S. monetary policy would tighten when the economic outlook improves sufficiently.  That time is not yet now.  Larry Summers, special economic advisor to President Obama, called improvement in the U.S. economy “significant.”  President Obama in turn won the Nobel Peace Prize. 

The Bank of Korea held its key rate at 2.0%, where such has been since February.  This decision was expected.  South Korean producer prices fell 2.6% in the year to September, the fifth sub-zero result in a row.

Italian industrial production leaped 7.0% in August, a record monthly advance, but fell 14.3% on-year.  Such follows July’s 2.4% increase. French industrial output jumped 1.8%, cutting the 12-month drop to 10.8%.  Analysts had expected monthly gains of 1.5% in Italy and 0.3% in France.  Production in the second and third largest Ezone economies was stimulated by government auto incentives.

Germany’s news was not stellar, in contrast.  Exports fell 1.8% in August and 20.0% from a year earlier, cutting the seasonally adjusted trade surplus to 10.6 billion euro fro EUR 12.5 billion in July.  That was the first export decline in four months.  The unadjusted trade surplus of EUR 8.1 billion was 25% smaller than a year earlier.  The unadjusted current account surplus of EUR 4.6 billion was down 43.2% on year and 59.6% smaller than in July.

Final German consumer prices in September recorded drops of 0.4% from August and 0.3% from a year earlier.  The harmonized CPI was revised down a tenth to month-on-month and year-on-year declines of 0.5%.  Non-energy consumer prices slid 0.3% and posted an on-year advance of just 0.8%.

German corporate bankruptcies were 10.4% greater in July than a year earlier.  Household bankruptcies increased 7.3%.

Finnish industrial output slid 0.3% in August and slumped 21.2% from a year earlier.

Norway reported a bigger 0.8% rise of consumer prices in September.  The 12-month gain of 1.2% exceeded forecasts of +0.9%.  Core CPI inflation, which the central bank targets, increased to 2.4% from 2.3%.  Norway is a strong candidate to experience the next central bank hike following Israel and Australia.  Norwegian producer prices fell 6.0% last month and by 6.7% from a year before.

British producer output prices increased 0.5% in September, lifting the 12-month change to plus 0.4% from minus 0.3% in the year to August.  Core PPI-O went up 0.5% from August and 1.4% from a year earlier.  Markets expected a tiny 0.1% increase in producer output prices.  Producer input prices fell by 0.5% from August and 6.5% from September 2008.

The U.K. trade deficit in goods and services fell 2.2% to Gbp 2.32 billion in August.  The merchandise trade gap (goods only) of Gbp 6.24 billion was the smallest deficit since mid-2006.  Both exports (-0.6%) and imports (-1.2%) fell compared to July.

Japanese core domestic machinery orders firmed 0.5% in August, only a fourth as much as forecast, and posted an on-year plunge of 26.5%.  This small advance follows a 9.3% decline in July — clearly a weak trend.  Foreign orders for Japanese machinery fell 15.7% on month and 54.4% on year in a further sign that the world’s second largest economy is struggling under the weight of an expensive yen.

Czech consumer prices slid 0.4% in September and was unchanged on year, reinforcing speculation that monetary policy will be eased further soon.

Canadian jobs increased 30.6K in September, while the jobless rate fell to 8.4% from 8.7% in August.  Analysts had predicted an 8.8% unemployment rate with a 7.5K drop in jobs.  Average wage earnings posted a 12-month rise of just 2.5%, lowest in 2-1/2 years.  The jobless rate had not fallen since July 2008.

Canadian and U.S. trade figures get released at 12:30 GMT.

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


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