Dollar Mixed Ahead of Bernanke House Testimony

February 24, 2010

The first part of Fed Chairman Bernanke’s semi-annual Humphrey-Hawkins testimony begins at 15:00 today in the House of Representatives.  He testifies tomorrow in the senate.  Investors are eager to hear him field questions about the exit strategy.  Bullard (SL Fed president) overnight said a lot of unwinding of quantitative easing is needed before any rise of the Fed funds rate.

Commodity currencies are lower.  The kiwi, Aussie dollar, and Canadian dollar show drops against the greenback of 0.3%, 0.2% and 0.1%.  The U.S. currency otherwise lost 0.3% against the yen, euro and Swiss franc and 0.2% relative to sterling.  The yen is hovering at 90/$ with steady strong demand out of Tokyo.

Oil and gold fell 0.6% and 1.1% to $78.37 per barrel and $1091.40 per ounce, respectively.  Gilt, JGB, and bund 10-year yields are somewhat lower.

Stocks fell in the Pacific Rim by 1.5% in Japan and Australia, 1.4% in Pakistan, 1.0% in South Korea, 0.9% in Taiwan, 0.8% in Hong Kong and 0.7% in Singapore.  In Europe, the German Dax and Paris Cac are off 0.3% and 0.1%, while the British Ftse has edged 0.1% higher.

Japan posted a Y 85 billion customs clearance trade surplus last month compared to a deficit of Y 956 billion in January 2009.  Exports soared 40.9% on year and by 41.3% in real terms, while imports advanced 8.6%.  The seasonally adjusted trade surplus increased 11.1% between December and January to Y 728 billion.

Japanese corporate service prices fell 0.4% in January and by 1.0% from a year earlier.  Such had dropped 2.0% between 4Q08 and 4Q09.

Japan’s Shoko Chukin index of small- and medium-sized business sentiment rebounded to 42.3 after prints of 41.3 in January and 40.4 in December.  This is a diffusion index, however, meaning anything below 50 connotes overall pessimism.  The manufacturing component was 44.2, while non-manufacturing in February was at 40.7, down from 41.3 in January.

Retail investor sentiment in Japan took a big hit from Toyota’s troubles, dropping to minus 48 in February from minus 26 in January.

Germany released details of fourth-quarter GDP, showing unrevised economic growth of zero from 3Q and minus 2.4% from a year earlier in calendar adjusted terms. Domestic demand fell 2.1% in the quarter, with declines of 1.0% in private consumption, 1.5% in machinery and equipment investment, 0.5% in construction investment, and 0.6% in government spending.  Net foreign demand enhanced growth by 2.0 percentage points but was met mostly from inventories, which subtracted 1.2 percentage points of growth.  Real GDP fell 4.9% last year.

German consumer confidence printed at 3.2% in March, off a tenth from the prior month but better than forecast.

Euroland industrial orders produced a big upside surprise.  Despite drops of 1.8% in Germany, 4.7% in the Netherlands and 4.4% in Portugal, orders for the 16-nation bloc went up 0.8% in December and by 9.5% from a year earlier.  Core orders, excluding those for heavy equipment, slid 0.4%, however.  Orders advanced 4.8% at an annualized rate between the third and fourth quarters.

Harvard Professor Rogoff continues to generate headlines, now predicting a bubble collapse in China within the decade that will depress growth to 2% and create a whole regional slump.

Adam Posen of the Bank of England sees subdued British inflation throughout the coming decade.

Yamaguchi of the Bank of Japan anticipates a slowdown of growth for a couple of quarters in which the central bank will try to prevent deflation from intensifying.

Australian wages rose 0.6% last quarter and by 2.9% from a year earlier.  Both changes were smaller than in the third quarter and less than forecast.

Hong Kong GDP accelerated to growth of 2.3% last quarter after 0.4% in 3Q09.  GDP was 2.6% greater than a year earlier, whereas it had been 2.2% less than a year before in the third quarter.  Malaysian GDP posted an on-year advance of 4.5% in 4Q but fell 1.7% in 2009 as a whole.  Malaysian consumer prices increased 1.3% between January 2009 and January 2010.

South African consumer prices went up less than expected in January, increasing 0.3% on the month and 6.2% on the year after a 6.3% rise in the year to December.

Corporate and consumer sentiment in the Czech Republic each improved in February.  Retail sales in Hungary in December were 7.4% lower than a year before.

Italian retail sales were flat in December and up 0.7% from a year earlier.  Norwegian joblessness in December was at 3.3%.  Iceland reported a higher on-year CPI inflation rate of 7.3%.  Austrian industrial production in December was 4.6% lower than a year earlier.

U.S. new home sales get reported later today.

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



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