New Overnight Developments Abroad: Sharp Upturn in Sterling

October 15, 2009

The pound leaped 1.8% against the dollar and euro as the FT reported a top Bank of England official, Fisher, claiming that the asset purchase program may be paused in November.  Fisher reportedly cited better confidence and higher equity prices as evidence of coming recovery.  10-year gilts rose 4 bps to 3.54%.

The dollar also fell 0.9% against the kiwi and 0.6% against the Australian dollar but recovered 0.8% versus the yen.  The dollar is above JPY 90.0, and sterling is above $1.60 again.  The dollar is unchanged overnight versus the euro and Canadian dollar, and it has edged down 0.1% against the Swiss franc.

Bund, Treasury, and JGB yields also rose.

But gold retreated 1.0% to $1053.60 per ounce.  Oil is steady and above $75 at $75.23 per barrel.

The previously lagging Nikkei caught up 1.8%.  Elsewhere in the Pacific Rim, stocks firmed 3.7% in Singapore but by a lesser 0.6% in Australia and South Korea, 0.5% in Hong Kong, 0.4% in China, the Philippines and Pakistan.  Further concern about the hospitalized king of Thailand drove that bourse down 5.3%.  The German Dax and Paris Cac are unchanged, and the British Ftse has edged 0.2% lower in response to the FT story.

Reserve Bank of Australia Governor Stevens made very hawkish remarks, suggesting more rate increases this year and an eventual steepening of the increment of the rate hikes that central bank makes. 

In New Zealand, consumer prices climbed 1.3% in the third quarter, twice as much as in the second quarter, and were 1.7% higher than a year before. 

The Bank of Italy believes Italy’s recession has ended and is forecasting growth last quarter of 1.0%.

China reported a huge 18.9% on-year jump of foreign direct investment inflows in the year to September.  Such only turned positive in August, and inflows for the year to date remain 14.2% below the level in January-September 2008.  Markets eagerly await the estimate of 3Q GDP growth next week.  China also announced a 2.8% on-year increase in home prices.

The Swiss ZEW index of investor confidence improved to 65 in October from 58 in September.

Singapore retail sales jumped 5.2% in August, trimming the 12-month decline to 5.2% from 9.8% in the year to July.  Vietnamese consumer confidence rose 5.3% to 128.0 in September from 121.5 in August.  South Korean import prices dropped 1.9% in September and by 10.8% from September 2008.

Japanese industrial production growth for August was revised down two-tenths to a gain of 1.6% from July but an on-year decline of 19.0%.  Output in July-August was 6.3% higher than the 2Q level after advancing 8.3% between 1Q and 2Q. The ratio of inventories to sales was 10.8% lower in July-August than in 2Q.  Capacity usage increased 2.3% in August but was 20.3% lower than a year earlier.  Capacity fell 1.9% from a year before.

The monthly proxy estimate for the Japanese Tankan diffusion indices, calculated by Reuters, showed an unexpected 2-point deterioration among manufacturers to minus 35 and only a 1-point improvement to minus 33 for non-manufacturers.  The latter was only 6 points better than the cyclical low last February, while the former represented the first decline in seven months.  Survey participants continue to expect improving trends in the near term.

The Bank of Japan released its monthly economic report, projecting gradual improvement but noting continuing weakness in the labor market and profits despite rising industrial output, public investment, and exports.

Euroland consumer prices were unchanged on month in September and down 0.3% from a year earlier.  The flash indication had implied a 0.1% monthly increase.  Core inflation was 1.1%, down from 1.2% in August and July and 2.5% in September 2008.  Energy prices fell 1.2% in the latest month and 11.0% from September 2008.  The ECB published its October Bulletin, which typically stuck closely to what Trichet said at his press conference early this month.

Italian consumer prices slid 0.2% in September and firmed 0.2% on year.  Austria’s CPI firmed 0.1% last month from both August and a year earlier.  Slovakian consumer prices inflation dropped to an on-year pace of zero in September from 0.5% in August.  Czech producer prices fell 5.4% in the year to September, which was a greater decline than forecast.  Spanish home prices dropped a a decelerating 0.9% in 3Q09 and posted an on-year decline of 7.8% after falling 8.2% in the year to 2Q09.

Finnish retail sales fell 3.8% in August, and the current account dipped unexpectedly into deficit that month.

U.S. economic news today will include the release of consumer prices, the N.Y. and Philly Fed monthly indices, and weekly jobless claims.  Canada reports its latest monthly manufacturing survey results, and the central bank in Turkey is expected to cut its benchmark interest rate.

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


Comments are closed.