Better Market Tone Tuesday

February 9, 2010

Commodity currencies have firmed against the U.S. dollar, and the euro and Swissy have recovered, too, despite continuing worries about Greek, Spanish, and Portuguese public finances.  The greenback fell 0.9% against the kiwi, 0.7% against the Australian dollar, 0.4% against the euro and Swiss franc and 0.3% relative to the Canadian dollar.  The yen lost 0.3% against the dollar.  Sterling eased 0.1%.

Stocks rose over 1.0% in Hong Kong, Taiwan, South Korea, and Singapore.  The Nikkei slid 0.2%, however, and the German Dax and Paris Cac are trading 0.1% and 0.3% lower.  Britain’s Ftse is up 0.2%.

Gilt and bund yields are somewhat higher, while the 10-year JGB eased a basis point.

Oil and gold recovered marginally to $72.14 per barrel and $1067.30 per troy ounce.

Germany’s seasonally adjusted exports surprisingly rose another 3.0% in December, bringing their advance since August to 9.9%.  Imports over those four months firmed just 0.7% on balance despite a 4.5% jump in December.  The seasonally adjusted trade surplus averaged EUR 15.5 billion per month last quarter, up from EUR 11.1 billion per month in 3Q09, EUR 10.3 billion per month in 2Q and EUR 8.2 billion per month in 1Q09.  Germany’s current account surplus of EUR 20.6 billion not seasonally adjusted in December was 48.2% wider than a year earlier.  However, the 2009 current account surplus was 27.7% lower than in 2008.

German consumer prices fell 0.6% in January and rose just 0.8% from a year earlier.  Most of the drop was seasonal.  Seasonally adjusted consumer prices eased just 0.1% from December.  Average CPI inflation had been 0.4% in 2009 after an average pace of 2.6% in 2008. 

Britain recorded a bigger-than-anticipated Gbp 3.26 billion goods and services trade deficit in December, but such narrowed for a second straight year to Gbp 33.8 billion in 2009 from Gbp 38.2 billion in 2008 and Gbp 44.9 billion in 2007.  The goods-only trade shortfall widened to Gbp 7.28 billion in December from Gbp 6.80 billion in November.  Underlying export and import growth trends are now positive, with 4Q over 3Q advances of 7.9% and 7.6%.

Among other released U.K. data, the RICs house price diffusion index improved to 32% in January form 30% in December, while the British Retail Consortium reported the first on-year drop of same-store sales, off 0.7% in the year to January, since August.  Total retail sales were up 1.2% on year after a gain of 6.0% in the year to December.

Japanese machine tool orders were 192% greater in January than a year earlier.

South Korean producer price inflation accelerated to 2.8% in January from 1.8% in December, another sign that the onset of interest rate increases is approaching.

ECB President Trichet reportedly left a conference in Australia a day early, fanning rumors about a pow-wow over Greece’s debt problems.  But a Greek official again said outside aid will be unnecessary and would send the wrong signal to the market.  Greek industrial production was 7.6% lower in December than a year earlier.  Greek consumer prices rose 2.4% between January 2009 and January 2010, less than forecast.

Hungary and Romania reported trade figures.  Hungary had a EUR 375 million surplus in December, 38% bigger than anticipated.  Romania had a deficit of EUR 851 million in December, which was 46% smaller than in December 2008.  Czech consumer prices rose 1.2% in January but merely 0.7% from a year earlier.

Chinese motor vehicle sales in January were more than twice as large as a year earlier.

South African unemployment remained awful last quarter at 24.3% after 24.5% in 3Q09.

Reserve Bank of Australia Governor Glen Stevens warned that low interest rates for too long risked asset price bubbles.

Scheduled U.S. data included the NIFB small business survey, IBD/TIPP optimism, and wholesale inventories.  None of these are top-tier market movers.  Another big snowstorm is predicted to hit the eastern United States within 24 hours.  The first calendar quarter is the hardest to adjusted for seasonal variation because of huge range of severity in winter weather.

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



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