New Overnight Developments Abroad: Anticipating A Smaller Drop in U.S. Jobs

November 6, 2009

Markets are positioned for a less dire labor market report from the United States due at 13:30 GMT.  Forecasts center on a 175K decline of jobs in October and a 9.9% unemployment rate.

In the meantime, Canada reported worse-than-forecast labor statistics for last month.  Jobs, which had been expected to climb 10K on top of increases of 30.6K in September and 27.1K in August, instead fell by 43.2K, and the jobless rate increased two-tenths to 8.6% instead of just one tenth.  Average hourly wages registered a gain of 3.3% from October 2008, up from a 12-month rise of 2.5% in September.

The Australian dollar and kiwi advanced by 0.7% and 0.4% against their U.S. counterpart following a hawkish Australian quarterly Monetary Policy Report that revised upward projected GDP growth and predicts a gradual further rise in the central bank cash rate.

The greenback otherwise is down 0.2% against sterling and by 0.1% against the yen, euro and Swiss franc, but it edged 0.1% higher against the Canadian dollar.

Taking a cue from North American trading on Thursday, stocks advanced in the Pacific Rim with gains of 2.5% in Thailand, 1.2% in Indonesia, 1.1% in Singapore, 1.6% in Hong Kong, 1.3% in South Korea, 1.9% in Australia, 0.5% in China and 0.7% in Japan.  The Ftse is up 0.3%, and the Dax has edged 0.1% higher in Europe.

The ten-year JGB yield held steady at 1.45%, while gilt and bund yields climbed by a further 2 bps and one basis point.

Oil firmed 0.3% to $79.85 per barrel, while gold increased 0.4% to $1093.50 per ounce.

The Reserve Bank of Australia bumped up projected 2009 growth to 1.75% from a prior 0.5% forecast.  2.25% growth was penciled in for the year to mid-2010.

An IMF official has urged China’s government to escalate efforts to slow credit growth.

Japan‘s index of leading economic indicators improved another 3.2 points to 86.4 in September.  The diffusion indices for the leading economic index was the highest since February 2004.  Those for the coincident and lagging indices were the best since January 2006 and April 2008.  Japanese stock and bond transactions last week generated a Y 154 billion outflow, down from an outflow of Y 534 billion in the week to October 24.

German industrial orders increased 0.9% in September and by 8.9% (40.6% annualized) in the third quarter.  However, domestic capital goods, a leading indicator of business investment, dropped 7.9% after a 3.8% decline in August.  Overall domestic orders fell 2.3%, while foreign orders increased 3.7%.  Comparisons of September against 3Q levels showed a decline of 6.7% in domestic capital goods orders and a rise of 7.7% in foreign capital goods orders.

Austria’s central bank chief and a member of the ECB Governing Council said no decision was made regarding whether to hold 12-month liquidity injections after yearend.  Yesterday’s press conference left analysts thinking that portion of quantitative stimulus would be discontinued.

British producer price data for October indicated surprising pressure at the input stage.  The PPI-I index increased by 2.6%, most in 16 months and swung to a 12-month increase of 0.1% from an on-year drop of 6.2% in September.  Analysts expected the PPI-I to advance 1.5%.  The PPI-output index rose 0.2% and by 1.7% from October 2008.

Peru’s central bank left its monetary policy reference rate unchanged as expected at 1.25% and predicted steady policy for the period ahead.

France’s trade deficit narrowed 18% between August and September and was smaller than forecast in the latest month.

Swiss unemployment edged up to an as-expected 4.0% last month.

Finnish GDP fell 0.5% in August and by 8.4% from a year earlier.  Austrian wholesale prices dropped 0.1% in October and by 6.2% on year.

Norwegian industrial production increased 0.9% in September thanks to a 2.2% jump in manufacturing output.  Industrial output dropped 1.2% on year.

Hungary’s trade surplus was bigger than expected at EUR 486 million, reflecting on-year plunges of 23.6% in imports and 17.6% in exports.  The Czech trade surplus amounted to CZK 17.8 billion in September, up from CZK 10.5 billion a year earlier as imports tumbled 18.0% and exports fell 13.1%.

South African reserves rose more slowly (1.7%) in October than such had in September.

Chilean consumer prices were steady on month during October.

Besides the monthly labor force survey, U.S. consumer credit and wholesale inventory data are also getting released today.  A meeting of G-20 finance ministers begins in Scotland.

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


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