Australian Central Bank Tightens
March 2, 2010
Lessening risk aversion is reflected in firmer yen and higher stocks. The dollar firmed 0.2% against the euro, Swiss franc and sterling even though aid for Greece from Germany and France appears to be an increasing possibility. The dollar has fallen 0.6% against the Canadian dollar as investors await a Bank of Canada policy announcement at 14:00 GMT that is expected to leave its key rate at 0.25% but solidify the likelihood of an increase at midyear. The dollar slid 0.1% against the yen but firmed 0.4% against the New Zealand dollar.
Stocks climbed 2.1% in India, 1.6% in Thailand, 1.3% in South Korea, 0.9% in Indonesia, 0.6% in New Zealand and 0.5% in Japan and 0.3% in Australia and Taiwan. In Europe, the Ftse is 0.5% higher, and the Dax and Cac40 are up 0.4%.
The Reserve Bank of Australia, which did not change policy in February because of European fiscal concerns, implemented a fourth 25-basis point rise of its cash rate to 4.0%, calling this latest move a “further step in the process” of lifting rates to a more average level. This is needed because growth appears close to trend already and inflation in 2010 is seen hovering near target. The rate hike was generally expected.
Ten-year JGB and gilt yields slid two basis points. German bunds are steady.
Oil and gold prices edged up 0.2% and 0.1% to $78.85 per barrel and $1118.90 per troy ounce.
Australian retail sales rose 1.2% in January, more than twice as fast as forecast, reversing a 0.9% drop in December. But building approvals fell 7.0% unexpectedly in the same month, showing the effect of rising interest rates.
Japan reported a surprisingly large drop in the jobless rate to a ten-month low of 4.9% in January from 5.2% in December and 5.6% last July. Analysts had forecast 5.2%. Jobs were 1.3% less than in January 2009, a smaller on-year drop than 1.7% posted in December or 2.0% in the year to November. The job offers-to-seekers ratio of 0.46 remained historically very low but above November’s print of 0.43. Japanese real household spending slid 1.3% on month in January but was 1.7% greater than in January 2009. Real disposable income recorded an on-year drop of 0.4%. A weak income situation continues to discourage consumption.
Growth in Japan’s monetary base decelerated sharply to 2.2% on year in February from 4.9% in January and 4.4% in the final quarter of 2009. Balances at the central bank were just 15.3% greater than a year earlier, down from a 43.4% advance between January 2009 and January 2010.
According to preliminary data, CPI inflation in the euro area settled back to 0.9% in February from 1.0% in January. Analysts thought such would have remained steady. Producer prices in Euroland shot up 0.7% in January, more than expected because of a 2.0% jump in energy. Intermediate goods prices were also a little frothy, rising 0.5%. However, non-energy consumer prices firmed 0.2% and fell 1.7% from a year earlier. The total PPI was 1.0% lower than a year earlier.
Britain’s construction purchasing managers index remained below the 50 reading that separates expansion from contraction. It printed at 48.5 in February, one-tenth less than in January.
European fiscal watchers are eying a meeting this Friday between German Chancellor Merkel and Greek Prime Minister Papandreau.
Swiss GDP growth of 0.4% last quarter and 0.6% from 4Q08 were better than the third-quarter results and exceeded analyst expectations.
Italian consumer prices rose 0.1% on month and 1.2% on year in February, each a tenth less than forecast. In harmonized terms, the inflation rate was 1.1%.
Polish GDP growth accelerated to an on-year pace of 3.1% in the fourth quarter from 1.7% in 3Q09, prompting one central bank policymaker to suggest that interest rates may have to start rising sooner than previously thought.
South African motor vehicle sales growth accelerated to a 12-month rate of 16.2% in February from 12.0% in January.
Indian exports were 11.5% greater in January than a year before. Imports soared 35.5%. The $10.3 billion trade deficit was marginally bigger than in December.
South Korean consumer price inflation slowed to 2.7% on year in February from 3.1% in December. Core inflation was at 1.9%, down from 2.1%. Korea’s trade surplus of $2.33 billion in February reflected a 31% on-year rise in exports.
Monthly U.S. auto sales get reported later.
Copyright Larry Greenberg 2010. All rights reserved. No secondary distribution without express permission.
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