Narrowly Mixed Dollar Ahead of U.S. Jobs Report

January 8, 2010

The dollar has dropped 0.5% against sterling, 0.4% against the Canadian dollar and 0.1% to the yen but shows gains of 0.2% against the Swiss franc, Aussie dollar and kiwi and of 0.1% relative to the euro.

Stocks mostly rose, with advances of 1.1% in Japan, 0.7% in South Korea, 0.6% in Thailand and France, 0.5% in Taiwan and 0.4% in Germany.  The Ftse is flat.

Among sovereign bonds, ten-year yields firmed 1 basis point in Germany and Japan and 3 bps in Britain.

Gold prices settled back 0.8% to $1124.40 per ounce.  Oil slipped 0.1% to $82.55 per barrel.

German industrial production rose 0.7% in November, only half as much as forecast after declining 1.7% in October.  Production remains 16.5% below the prior cyclical peak in February 2008.  German retail sales fell 1.1% in November and by 2.8% from a year earlier.  That’s a deeper decline than the January-November on-year decrease of 1.8%.  The German current account surplus widened 63% in November to EUR 18.1 billion.  The trade surplus printed at EUR 17.4 billion, well above forecasts of EUR 12-13 billion.  Seasonally adjusted imports sank 5.9% on the month, while exports firmed 1.6%.  The seasonally adjusted trade surplus has recovered to EUR 15.0 billion per month in October-November from a monthly pace of EUR 11.1 billion in 3Q, 10.3 billion in 2Q and EUR 8.2 billion in the first quarter.

Revised Euroland GDP in the third quarter showed growth of 0.4% from 2Q and minus 4.0% from a year earlier.  Inventories accounted for all of the quarterly growth.  GDP had previously posted quarterly declines of 1.9% in 4Q08, 2.5% in 1Q09 and 0.1% in 2Q09.

Euroland’s jobless rate continues to crest, firming to 10.0% in November from 9.9% in October and 8.0% in November 2008.  Youth joblessness is 4.4 percentage points higher than a year earlier at 21.0%.  Italian unemployment firmed to 8.3%, highest since March 2004.  French and Spanish unemployment are at 10.0% and 19.4%.

British producer output prices rose 0.5% in December, more than twice as much as forecast, and by 3.5% from December 2008.  Core PPI-O climbed 0.7% from November and 2.6% from a year before.  Inflation has been stickier in Britain than other advanced economies.  Producer input prices went up 0.1% but posted an on-year advance of 6.9% last month.

Swiss unemployment firmed to 4.4% in December as expected from 4.2% in November.

The French trade deficit widened to EUR 5.3 billion in November from EUR 4.4 billion in October.

Spanish industrial production in November was 5.7% lower than a year earlier.  That was a smaller on-year decline than those of 9.2% in October or 13.0% in September.  Spanish consumer sentiment worsened further to 74.7 last month from 75.3 in November.

Italy registered a budget deficit of 5.2% of GDP in the first nine months of 2009.

Swedish industrial output firmed 0.2% in November but was 12.6% less than a year earlier.  Industrial orders rose by 2.1% from October and 1.5% from a year before.  Danish retail sales slid 0.3% in November and fell 2.8% on year.  Turkish industrial output edged up 0.2% in November.  Norwegian retail sales volume and industrial production respectively fell 1.2% and firmed 0.5% in November.  Their on-year changes were +2.1% and minus 4.3%.  Finnish industrial output increased 1.3% in November but remained 15.2% below the November 2008 level.

More confusion surrounds Japanese yen policy, as the prime minister scolded the new finance minister for talking openly about foreign exchange policy.  The yen seems likely to drift lower this quarter.

Japan’s index of leading economic indicators printed higher at 91.2 in November after 89.4 in October, but its diffusion index fell back to 70 from 100.  The Coincident index rose 1.6 points to 95.9, while the lagging index fell 0.9 points to 82.8.

The Bank of Korea as expected left its key interest rate at 2.0% where such has been since February 2009.

Motor vehicle sales in South Africa were 13.1% lower in December than a year earlier.

Canada reported no change in the 8.5% unemployment rate, which was as expected.  However, jobs fell 2.6K, a worse outcome than the predicted increase of 20K.

The December U.S. jobs report is due at 08:30 local time (13:30 GMT).  Some analysts think such will show the first rise of employment since December 2007.  U.S. wholesale inventories and consumer credit figures also get released today.

Copyright Larry Greenberg 2010.  All rights reserved.  No secondary distribution without express permission.



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