All Quiet on the Currency Front

March 11, 2010

The dollar shows no overnight change against the yen, euro and Swiss franc.  It’s up 0.1% against the Canadian and New Zealand dollars but off 0.4% against sterling and 0.1% relative to the Australian dollar.

Aside from a 1.0% rise of the Japanese Nikkei, there’s been scant movement in stocks as well, limited to +0.7% in Thailand, +0.4% in Singapore and India, +0.2% in Indonesia, +0.1% in Hong Kong and Germany, minus 0.1% in China, Australia and New Zealand, minus 0.2% in France and Britain, minus 0.3% in South Korea and minus 0.5% in Malaysia.

Ten-year JGB, bund, and gilt yields firmed a single basis point.

Oil is steady at $82.10 per barrel. Gold edged down 0.2% to $1106.40 per ounce.

Japanese fourth-quarter GDP growth was revised down to 3.8% at an annualized rate from 4.6% reported initially.  The biggest reason for the cut was a revised contribution from inventories to minus 0.6 percentage points from +0.3 percentage points.  Real GDP was 1.0% lower than in 4Q08, a revision from minus 0.4%.

Japanese corporate goods prices rose 0.1% in February but posted a smaller 12-month decline of 1.5% after dropping 2.1% in the year to January.  Export and import prices posted monthly declines of 0.9% and 0.6% last month.  Speculation persists that the Bank of Japan may announce additional quantitative easing after next week’s policy meeting in order to counter deflation.

A slew of monthly Chinese data released today has fanned more concern about coming policy constraints.  China reports statistics in on-year terms.

  • Retail sales accelerated to a rise of 22.1% in February from 17.5% in January.  Analysts had predicted 18.1%.
  • Industrial production was 20.5% greater in January-February than a year earlier.
  • Consumer price inflation jumped more than anticipated to a 16-month high of 2.7% from 1.5%, while PPI inflation picked up to 5.4% from 4.3% in January.
  • M2 growth of 25.5% after 26.0% in January is running well above the target pace this year of 17%.
  • New bank lending amounted to 700 billion yuan last month.  Although less than January’s torrid 1.39 trillion yuan surge, such was 100 billion yuan greater than expected.  A target for 2010 of 7.5 trillion yuan had been set.
  • Fixed asset investment was 26.6% greater in January-February, about the same advance in January-February 2009 but down from 30.5% in full-2009.

Australian unemployment backed up to 5.3% last month from 5.2% in January but remained below November’s 5.6%.  Jobs increased just 0.4K because of an 11K decline in part-time workers.  Employment had advanced 56.5K in January, 37.5K in December and 31.4K in November and has soared around 3.7% at an annualized rate over the half-year since last August.

Central banks in South Korea and the Philippines left their key interest rates steady at 2.0% and 4.0%, respectively.  Those outcomes were expected.

Consumer confidence in Thailand slid a point to 70.9 in February from 71.9 the prior month.  Malaysian industrial production rose 12.7% on year in January.

Manufacturing output in South Africa fell 0.6% in January and posted a smaller 3.7% 12-month advance than was expected.  Turkey’s current account deficit narrowed slightly in January.

The French budget deficit in January of EUR 9.2 billion was only about 7% as large as expected.  French non-farm payroll jobs were revised to show a smaller 0.1% decline last quarter.  German hourly labor costs fell 0.5% last quarter.  The IFW Institute warned that bad weather could result in negative German growth for the first quarter of 2010.  The ECB Bulletin was released and rehashed what Trichet said at the last press conference as is that bank’s custom.

The euro area posted a EUR 4.8 billion current account surplus in 4Q09, the first quarterly surplus in over a year, after a deficit of EUR 2.7 billion in the third quarter of 2009.  As a percent of GDP, the current account equaled +0.2% after deficits equal to 0.1% of GDP in 3Q, 1.0% in 2Q, 1.7% in 1Q and 1.4% of GDP in the final quarter of 2008.

The Bank of England’s quarterly survey of expected inflation revealed a marginal acceleration in the projected price advance to 2.5% over the coming 12 months.

Hungarian consumer prices firmed 0.3% last month but decelerated more than expected to an on-year pace of 5.7% from 6.4% in January. Swedish consumer prices rose 0.6% in February, doubling the 12-month increase to 1.2%.  Core inflation was 2.7%.

Markets await the Swiss National Bank’s quarterly economic assessment.  No rate change is anticipated.  See my preview.

U.S. and Canadian trade statistics get released today.  Investors also await U.S. jobless claims, Canadian house prices, and Canadian quarterly capacity usage.

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



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