New Overnight Developments Abroad: Dollar Down Slightly Despite Further Drop in Asian Stocks

October 29, 2009

The dollar has lost 0.7% against the Australian dollar, 0.6% versus sterling, 0.4% relative to the kiwi, 0.3% against the euro and Swissy, and 0.2% against the Canadian dollar.  Dollar/yen is unchanged.

Stocks fell 2.5% in China, 2.4% in Taiwan, 1.8% in Japan, 3.1% in Vietnam, 1.7% in South Korea, 2.3% in Hong Kong and 2.4% in Australia.  But the German, French, and British bourses have barely moved.

The yield on ten-year JGBs eased two basis points back to 1.41%.

Oil and gold bounced up 0.3% and 0.5% to $77.69 per barrel and $1035.20 per ounce.

Euro area sentiment indices in October improved more than forecast.  The business climate index printed at minus 1.78 after minus 2.07 in September.  Overall economic sentiment was 86.2, 3.4 points higher than the month before and 10.2 points better than three months earlier.  The low last March was 64.6.  Industrial sentiment advanced another three points to minus 21.  Consumer confidence firmed one point to minus 18.  The indices for services and construction improved by two points and one point, while retail was steady with a score of minus 15.

German labor statistics were also encouraging.  Unemployment fell 26K in October instead of rising 15K as forecast.  The number of jobless had also declined in August and September.  Germany’s unemployment rate eased to 8.1% from 8.2%.  Employment was 0.3% lower in September than a year earlier. 

Spanish on-year CPI inflation was revised to minus 0.6% in the year to October.  Housing permits in Spain sank 45.3% in the year to August. Italian hourly wage growth accelerated to an on-year increase of 3.1% in September from 2.4%.  The Danish jobless rate climbed to 4.1% in September from 3.7% in the prior three months.  Unemployment in Hungary rose to 10.3% in July-September from 9.9% in June-August.  Norwegian real retail sales unexpectedly fell 1.2% in September.  Belgian consumer prices fell 1.0% in the year to October after an on-year decline of 1.2% in September.

British mortgage approvals in September of 56.2K surpassed expectations and were the highest since February 2008.  However, M4 lending to households and firms posted their weakest on-year increases in a dozen years, fanning expectations that the Bank of England may not end asset purchases after next month.  M4 advanced 11.3% from a year earlier.

Japan released several statistics.

  • Industrial output expanded 1.4% in September and 7.2% in the third quarter.  The inventory ratio in those periods fell by 4.7% and 12.3%, respectively.  Indications for October and November suggest that industrial production in those months will be 4.2% greater than the 3Q level.  Output in September was still 18.9% less than a year earlier.
  • Corporate service prices eased 0.2% in September and by 3.2% from a year earlier.  Their on-year change has fluctuated between minus 3.1% and 3.5% since June.
  • In September, auto production and exports were 21.6% and 35.7% lower than a year earlier.
  • Stock and bond transactions last week generated a Y 406 billion outflow compared to a inflow of Y 344 billion in the week of October 17th.

The Reserve Bank of New Zealand left its cash rate unchanged at 2.5%, and Governor Bollard said rates would probably remain on hold until after mid-2010.  New Zealand’s NZ$ 424 million trade deficit in September was smaller than forecast and down from NZ$ 719 million in August.

Russia’s central bank implemented its eight interest rate reduction in the past six months, cutting the benchmark refinancing rate by 50 basis points to 9.5%.

New home sales in Australia fell 4.5% last month.

South African producer prices fell by 3.7% in the year to September, and private credit grew at a 43-year low of 1.5% from a year before.  The jobless rate increased to 24.5% in the third quarter from 23.6% in 2Q.

Markets await the advanced U.S. report on 3Q GDP and weekly jobless claims due at 12:30 GMT.  Canada will be reporting producer prices then.  The Kansas City Fed index also arrives on this penultimate trading day of October.  Many Japanese statistics arrive tonight.

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


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