New Overnight Developments Abroad: U.S. Jobs Day

December 4, 2009

The dollar is mostly marking time, as dealers await the November U.S. jobs figures.  The whisper numbers suggest a bigger employment decline than the 120K consensus of analysts.  The greenback firmed 0.1% against the yen, is unchanged relative to the euro and Swissy, and slid 0.2% against the Canadian and Aussie dollars and by 0.3% versus the kiwi.  A bigger 0.6% drop has been posted against sterling.  The rand softened after gold slid as much as 2% from another peak.

Treasury Secretary Geithner said the softer dollar reflects more hopeful investor confidence after the deep recession.  While true, that’s not the message that European or Japanese officials want to hear, as it puts currency market developments in an acceptable light.  Japan’s deputy prime minister indicated a preference for a bigger retreat of the yen.

Analyst spin on the ECB decision to index the interest rate its December and final 12-month refinancing operation is that this indeed is a hawkish gesture, setting the table for a possible rate hike in the latter part of next year.  I’m not convinced.  It only creates flexibility for such a choice.  The decision will depend on future data. Bundesbank President Weber suggested that more dismantling of unconventional stimulus is likely to come.  The German central bank revised up projected 2010 GDP growth to 1.0% from zero and reduced its forecast contraction in 2009 to 4.9% from 6.2%.  The central bank of Germany projects weak growth of only 1.2% in 2011.

Stocks are mostly lower, with net gains of 1.5% in China and 0.5% in Japan as exceptions.  Equities are off 1.5% in Australia, 0.9% in Pakistan and the Phiippines, 0.7% in Britain and Thailand, 0.6% in Germany, France and Singapore, and 0.5% in India and Indonesia.  If stocks falter after the jobs data get released, the dollar ought to have a decent day.

Gold is down 1.1% on balance at $1204.9 but not before a new high of $1226.56 per troy ounce was set. Oil is 1.0% softer.

The 10-year JGB yield firmed 3 basis points to 1.30% on signs that more fiscal stimulus may be undertaken.  No major economy has worse public finances than Japan.  Bund yields dipped marginally, and gilts are steady.

Canadian labor statistics for November, released 90 minutes ahead of the U.S. report, were much better than forecast.  Jobs in Canada climbed 79K, and the unemployment rate eased to 8.5% from 8.6%.  On-year wage growth of 2.3% represented a 32-month low, however, and employment was still 1.9% below the October 2008 peak.

Revised South Korean GDP jumped 3.2% last quarter and registered an on-year 0.9% increase.  The won was buoyed by the better-than-forecast figure and seems likely to show its largest advance versus the dollar since May.  Sales of imported cars were 108.3% greater in November than a year earlier.

Swiss consumer prices rose 0.2% in November and were unchanged from a year earlier after having dropped 0.8% in the year to October.

Filipino consumer prices increased 0.6% last month and recorded a 2.8% on-year increase.

In Greece, where public finances fell apart this year, the recession continued in the third quarter.  Revised figures showed drops in GDP of 0.4% from 2Q and 1.7% from the third quarter of 2008.

New Zealand’s fiscal deficit has also surpassed budget due to a deficiency of tax revenues.  The 3Q09 deficit was 38% wider than expected.

Malaysia’s trade surplus in October was 19.3% larger than a year earlier, as exports posted positive growth of 1.6% but imports slid 2.3%.

Spanish industrial production fell 9.2% from a year earlier in October, which was a smaller on-year drop than September’s.

Wages in the Czech Republic were 4.8% higher in 3Q than a year earlier, accelerating from a 2.8% increase in the year to 2Q.

The U.S. also releases factor orders today, while Canada’s IVEY-PMI will get reported.

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


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