New Overnight Developments Abroad: Yen and Dollar Climbed Significantly

November 19, 2009

The dollar has posted overnight gains of 2.3% against the kiwi, 1.4% relative to the Australian dollar, 0.8% against the Swiss franc, 0.7% versus sterling and the euro,and 0.6% against the Canadian dollar.  Risk aversion is making a comeback, and a 0.4% rise of the yen is consistent with that.

Keeping with that theme of lessening appetite for risk, stocks fell 1.3% in Japan, 0.9% in Hong Kong, 1.0% in Thailand, 1.3% in India, 0.6% in Indonesia, and the French, German, and British bourses have traded down 0.4%, 0.3% and 0.1%.

Ten-year gilt, bund, and JGB yields are up 3, 1, and 1 basis points.

Oil and gold lost 0.6% and 0.5% to $79.10 per barrel and $1135.60 per troy ounce.

Three Japanese indicators have been released:

  • Department store sales recorded a 10.5% on-year decline in October, their 20th sub-zero reading in a row.
  • The all industry index fell 0.6% in September versus expectations of no change.  September’s level was 7.1% lower than a year earlier and 0.1% softer than the third-quarter mean.  The index had risen 1.1% last quarter.  In September, construction (off 1.9%) and services (down 0.5%) fell, while industrial output (up 2.1%) and public spending (up 0.6%) rose.
  • The revised index of leading economic indicators in October was the same as the preliminary reading, but the coincident index was bumped marginally upward.  The diffusion index on the former matched August’s highest point since May 2002, while the coincident diffusion index hit its highest reading since January 2006.  The lagging diffusion index surpassed 50 (implying expansion) for the first time since January 2008.

The Bank of Japan began a two-day policy meeting today and will announce an unchanged 0.1% overnight rate target tomorrow.

British real retail sales firmed 0.4% in October and was 3.4% greater than a year earlier.  Such rose 1.1% in August-October from May-July and exceeded the August-October 2008 level by 2.8%.

U.K. October public finances again showed bigger deficits than forecast.  Public sector net borrowings of 11.4 billion pounds raised the fiscal year-to-date total to Gbp 86.9 billion, 156% greater than a year earlier.  The public sector net cash requirement of Gbp 81.6 billion in April-October compared to Gbp 19.2 billion a year earlier.  The debt/GDP ratio is now 59.2%, up from 48.6% in October 2008.

Britain’s Council of Mortgage Lenders reported slightly higher gross mortgage lending in October but a drop of 27% from a year before.  U.K. M4 climbed 1.8% in October and by a greater-than-forecast 11.0% from October 2008.

Italy’s trade deficit in September of EUR 897 million was 34.5% smaller than in August.  Dutch unemployment held steady at 5.2% last month.  Slovenian producer prices were unchanged in October and 2.4% lower than a year earlier.  Slovakian joblessness ticked down a tenth to 12.4% in October.

Swedish unemployment of 8.1% last month compared unfavorably with a 5.7% reading in October 2008.

The OECD released new growth forecasts.  For the entire OECD bloc of advanced economies, it has revised projected growth to 1.9% next year from 0.7% in its prior forecast and anticipates growth of 2.5% in 2011.  Selected country forecasts for the next two years now stand at:

GDP Growth-F 2010f 2011f
U.S. 2.5% 2.8%
Euroland 0.9% 1.7%
Japan 1.8% 2.0%
China 10.2% 9.3%

The Swiss trade surplus of Chf 2.46 billion last month was 28.8% larger than September’s surplus.

Singaporean GDP rose 0.6% in the year to 3Q09, swinging from a 3.3% drop between 2Q08 and 3Q08.

Turkey’s central bank is considered likely to reduce its 6.75% benchmark interest rate later today.  Trichet and Gonzalez-Paramo of the ECB speak.

In North America, the U.S. releases jobless insurance claims, the Philly Fed index, the index of leading economic indicators, and the Treasury quarterly refunding announcement.  Canadian wholesale turnover data, index of leading economic indicators and international securities transactions are due, too.  Plosser and Fisher of the Fed speak.

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


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