New Overnight Developments Abroad: Dollar and Pound Softer

November 18, 2009

The dollar is steady against sterling but has dropped 0.7% against the Swiss franc, 0.6% against the euro, 0.5% relative to the Canadian dollar, 0.4% against the kiwi, 0.3% against the Australian dollar and 0.2% against the yen.

Asian stocks were mostly lower, but European bourses are higher.  Equities fell by 0.5% in Japan, 0.7% in Pakistan and Singapore, and 0.3% in India and Hong Kong.  The German Dax and Paris Cac are 0.5% stronger, and the British Ftse has risen 0.3%.

Ten-year sovereign bond yields edged up a basis point in Britain and Germany and dipped one basis point to 1.30% in Japan.

Gold hit another record high of $1147.40 per troy ounce, up 0.7%.  Oil climbed 1.0% per barrel to $79.97 per barrel following news of lower U.S. inventories.

Minutes from the Bank of England’s November policy meeting revealed the first three-way vote in 15 months.  A 7-person majority agreed to raise the asset-buying program by Gbp 25 billion to Gbp 200 billion, but David Miles preferred Gbp 215 billion and Spencer Dale recommended no increase.  Policymakers were unanimous to keeping the Bank Rate at 0.5%, said the next serious review of the program would occur in February, and discussed but did not immediately accept reducing interest paid on bank reserves at the central bank.

Australia’s quarterly wage cost index rose by an expected 0.7% in 3Q and 3.6% from a year earlier, down from a 3.8% increase between 2Q08 and 2Q09.  The country’s index of leading economic indicators increased 0.9% in September and by 5.8% from a year earlier.  The coincident index firmed 0.2% in September.  Imports fell 2.0% in October.

Construction output in Euroland sank 1.1% in September and fell 2.6% last quarter (minus 10.0% annualized).  The quarterly contraction was greater than that of 1.6% in 2Q09, and the drop of 9.2% between 3Q08 and 3Q09 was also larger than the 7.4% decrease in the year to 2Q09.

The euro area’s current account swung to a EUR 5.4 billion seasonally adjusted deficit in September from a surplus of EUR 0.6 billion in August.  A EUR 0.3 billion surplus was generated last quarter after a deficit of EUR 11.8 billion in the second quarter.  The unadjusted deficit in the 12 months to September of EUR 88.5 billion was 16.3% smaller than a year earlier.  The Basic Balance (current account plus direct and portfolio investment) recorded a EUR 254.1 billion surplus during the twelve months to September compared to a EUR 23.7 billion deficit in the previous twelve months.

Spanish GDP growth last quarter was confirmed at minus 0.3% from 2Q and off 4.0% from the third quarter of 2008.

The British industrial trends survey produced a bigger-than-assumed improvement in the orders balance to minus 45 in October from minus 51 in September.  That’s still a very depressed figure.  The U.K., unlike Euroland, Japan, and the United States, saw GDP continue to shrink in the third quarter.

South African retail sales recorded an eighth consecutive on-year decline in September, a drop of 5.1% after a decrease of 6.5% in the year to August.

The China portion of President Obama’s visit ended without any substantial agreements.  A rise in the yuan seems far, far away.

Japanese machine tool orders rose 8.9% in October, according to revised data, as foreign demand growth of 32.5% offset a 19.5% drop in domestic demand.  Machine tool orders were 42.5% lower than in October 2008, nonetheless.

Canadian consumer price inflation swung from minus 0.9% in the year to September to plus 0.1% in the year to October, as the 12-month drop in energy narrowed to 12.7% from 18.7%.  Seasonally adjusted consumer prices rose 0.4% monthly.  The core index increased 0.2%, twice as much as the 0.1% monthly gain in September, and by 1.8% from a year earlier, up from a 1.5% increase in the year to September.  CPI increases last month exceeded expectations.

U.S. consumer prices and housing starts data get released today.  Bullard of the Fed will be speaking.

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


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