Stocks Again Up But So Is the Dollar

February 17, 2010

After falling sharply Tuesday, the dollar recovered 0.5% against the yen, 0.4% relative to the euro and Swissy, 0.3% against sterling, 0.2% against the kiwi and 0.1% against the Australian dollar.  The Canadian dollar is steady against its U.S. counterpart.  The Bank of Korea Governor opined that the dollar’s long-term trend is down.

The Nikkei jumped 2.7%. Some Asian markets have reopened; Hong Kong markets rose 1.3%, and the Malaysia market climbed 0.5%.  Elsewhere in the Pacific Rim, equities advanced 1.3% in India and Singapore, 2.2% in Australia, 1.8% in South Korea and 0.7% in Thailand and Indonesia.  In Europe, the Paris Cac, German Dax and British Ftse are 1.5%, 1.0%, and 0.6% higher.

Ten-year gilt, bund, and JGB yields are up a basis point, down a basis point and steady, respectively.

Oil recovered another 0.5% to $77.38 per barrel, while gold edged down 0.1% to $1119.00 per troy ounce.

Japan’s tertiary index, a measure of service-sector activity, fell 0.9% in December, three times more than forecast, and by 0.2% in the fourth quarter.  December’s level was 2.8% lower than at the end of 2008.  The monthly Tankan indices calculated and reported by Reuters fell to 9 in February in the case of manufacturing from 17 in January and 23 in November.  The non-manufacturing index stayed low at +2 after +1 in January, +13 in December and +19 in October.

Japanese machine tool orders increased 189.4% between January 2009 and last month.

Construction in Euroland rose 0.5% in December after dropping 0.8% in November.  Such was unchanged in October and off 0.7% in September.  December’s level of construction production was 3.1% below a year earlier.  Construction dropped 0.8% last quarter and by 5.5% between 4Q08 and 4Q09.

The seasonally adjusted euro area trade surplus rose to EUR 7.0 billion in December from EUR 5.3 billion in November, as exports grew 3.1% on month.  The unadjusted surplus was EUR 4.4 billion, with imports down 6.0% on year compared to a 0.5% decline in exports.  The 2009 surplus of EUR 22.3 billion was EUR 77 billion better than the deficit of EUR 54.7 billion in 2008.  Exports and imports posted calendar year declines of 18.1% and 22.3% in 2009.

Minutes were released from the Bank of England’s February 4 meeting.  The vote to leave policy settings unchanged and not to extend quantitative easing further then were unanimous (9-0).  The minutes indicate not substantial changes in the perceived growth outlook and suggest that such has to take a significant turn for the worse to prompt a resumption of asset purchases.

The latest batch of British labor statistics are disappointing.  The claimant count for unemployment had been projected to decline around 10K but instead rose 23.5K to its highest level since April 1997.  Average wage earnings in 4Q09 recorded on-year growth of only 0.8% including bonuses and 1.2% for regular pay only.  Those were the same gains as posted in September-November.  On an ILO basis, joblessness was at 7.8% last quarter and reached 2.457 million workers.  The productivity rate in manufacturing spiked to 6.4% on year in December, producing a 2.7% decline in unit wage costs.

Germany’s Chamber of Commerce revised projected GDP growth for this year upward by three-tenths to 2.3%.

Spanish GDP slid 0.1% last quarter and by 3.1% from the fourth quarter of 2008.  Spain’s prime minister, Zapatero, said the top fiscal priority is now budget consolidation.  His popularity has been fading, but he doesn’t face reelection in the near term.

Finnish producer prices rose 1.1% last month but were still 0.1% lower than a year earlier.

A new wave of anger toward banks was triggered by the revelation that Goldman Sachs had been complicit in enabling Greece to shield the extent of its budget deficit from investors.

South African retail sales fell 3.7% in the year to December, less than expected and less than November’s on-year drop of 6.6%.

Late yesterday came confirmation that Turkey’s central bank left its policy borrowing rate unchanged as analysts expected.  The bank’s governor subsequently indicated that a change is not now under consideration.

Scheduled U.S. data today include housing starts, import prices, industrial production and capacity usage, plus minutes from the last FOMC meeting will be released.  Canada reports wholesale turnover.

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

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