New Overnight Developments Abroad: Waiting For U.S. Data

October 16, 2009

Not much data has been released overseas.  In North America, Canada will release consumer prices at 11:00.  Later, the United States reports industrial output, capacity usage, the U. Michigan preliminary consumer sentiment index, and the Treasury monthly capital flows.  The Bank of Mexico is expected to retain a 4.5% benchmark interest rate, but Governor Ortiz is likely to lay seeds for a rate increase in 1H10.

Sterling continued to rally, touching a high of $1.6399 and showing a 0.3% net further gain on balance.  The yen weakened past 91.0 per dollar and is down 0.6%.  Otherwise, the U.S. currency has risen 0.3% against the Swiss franc and 0.1% relative to the euro, but it has eased 0.2% against the Australian dollar and 0.1% each relative to the Canadian and New Zealand currencies.

In the Pacific Rim, stocks in Thailand bounced back 3.5% and rose by 0.8% in India and Malaysia.  However, stocks gave back gains in other countries with losses of 1.3% in Vietnam, 1.1% in South Korea, 0.7% in The Philippines, 0.5% in Australia and 0.2% in Singapore.  The Nikkei moved 0.2% higher, and stocks in Europe are up by 0.7% in Germany, 0.6% in Britain, and 0.4% in France.

Ten-year JGB, bund and especially gilt (+7 basis points) are higher.

Oil and gold are generally steady at $77.52 per barrel and $1050.90 per ounce.

The Central Bank of Turkey reduced its benchmark rates by another 50 basis points, bringing the cumulative decline since November 2008 to ten percentage points.

Japan’s cabinet released a new monthly economic assessment showing a slight upgrade to “picking up” but also stressing that a self-sustaining mechanism of growth is not yet in place.  The performance of exports was upgraded to “increasing,” but high unemployment looms as a growth restraint.

Japanese stock and bond transactions generated a net outflow of Y 130 billion last week following a Y 1.774 trillion inflow in the quarterly cusp week of October 3rd.  A top Finance Ministry advisor, Gyohten, urged China, the U.S., and Japan to cooperate to stabilize the dollar.  Remarks by Bank of Japan Governor Shirakawa stressed signs of improvement in both the economy and financial markets.

The strain of an appreciating euro can be observed in Euroland trade figures released overnight.  The seasonally adjusted surplus dropped to EUR 1.0 billion in August, lowest since April, from EUR 6.0 billion in July, as exports sank 5.8%, reversing a 4.7% rise in July.  The unadjusted trade balance swung to a EUR 4.0 billion deficit from a EUR 12.3 billion surplus in July but was much smaller than a deficit of EUR 11.3 billion in August 2008.  Compared to a year before, exports fell 23.0%, and imports slumped 26.6%.

Swiss retail sales fell 1.0% in August after rising 1.6% the month before.

Italy’s August trade deficit was 37% narrower in August than a year earlier.

Paul Volcker urged U.S. politicians to enact financial market reforms.

Canadian consumer prices posted seasonally adjusted increases of 0.1% in September for all items and the targeted core index.  In the year to September, total consumer prices fell 0.9%, while core consumer prices rose 1.5%.  Both 12-month changes were a tenth less than posted in the year to August.

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


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