Dollar and Yen Weaker Versus European and Commodity-Sensitive Currencies

March 29, 2010

The dollar is unchanged against the yen.  Both have fallen 1.0% against the Australian dollar, 0.8% relative to the kiwi, 0.6% against the euro, 0.5% against the Canadian dollar and sterling, and 0.4% relative to the Swiss franc.  These moves were in continuing reaction to an accord among EU leaders to involve the IMF in aid to Greece should such support become necessary.

Equities leaped 2.6% in China.  Elsewhere in Asia, stocks gained 0.9% in Hong Kong and Taiwan, 0.8% in Singapore and 0.4% in India, but they eased 1.0% in Thailand, 0.7% in Indonesia, and 0.1% in Japan.  In Europe, which shifted to Daylight Savings Time over the weekend, the German Dax, Paris Cac and British Ftse have risen by 0.7%, 0.3%, and 0.2%.  There is again a five-hour difference between New York and London and a six-hour difference between New York and continental centers like Paris and Frankfurt.

Ten-year JGB yields rose 3 basis points to 1.41%, surpassing 1.40% for the first time since early November.  Ten-year gilts slid two basis points.

Firmer commodity prices supported the Canadian, Australian and New Zealand dollars.  Oil and gold rose 0.8% and 0.5% to $80.64 per barrel and $1111.30 per ounce.

Romania’s central bank cut its benchmark interest rate by 50 basis points to 6.5% as most analysts had predicted.  Hungary’s central bank is also expected to ease today.  In contrast, Israel may announce an interest rate increase.

Euroland economic sentiment rose to 97.7 in March from 95.9 in February, 96.0 in January, 86.7 last September and a low-point of 70.6 a year ago.  Industrial confidence rose three points to minus 10 and was 28 points higher than in March 2009.  Consumer confidence remained at minus 17 and has shown scant movement since October.  In March 2009, consumer sentiment bottomed at minus 34.  Confidence in services remained at +1.  Retail confidence improved two points to minus six, and construction sector confidence improved three points to a still-depressed score of minus 25.  Analysts had expected economic sentiment to print at 97.4.  A separate business climate index rose to minus 0.32 from minus 0.65 in February and a low of minus 3.48 in March 2009.

Four German states, North Rhine Westphalia, Hesse, Brandenburg and Saxony reported larger-than-expected monthly increases in consumer prices ranging from 0.3% to 0.6%.  On-year inflation ranged from 0.8% to 1.3%.  The increases stemmed from energy cost pressures.  Non-oil CPI inflation ranged from unchanged in Hesse to +0.4% on year in Saxony.

British mortgage approvals numbered 47,094 in February according to Bank of England data, lowest in nine months and below expectations.  M4 grew 3.9% in the year to February, down from 5.0% in the year to January.  Net mortgage loans and net consumer credit advanced by Gbp 1.6 billion and Gbp 0.5 billion, which were somewhat above forecast.

Over 35 people were killed in suicide bombings in Moscow, depressing the rouble.

The volume of Swedish retail sales fell 1.0% in February and rose just 2.3% from a year earlier.  These results were weaker than expected.

Japanese retail sales leaped 4.2% in the year to February, the best on-year gain since 1997 and over twice as much as anticipated.  Such grew 2.3% in the year to January but were down 0.7% on year between 4Q08 and 4Q09.  Economic recovery seems to be finally spreading to the consumer.  Large-store retail sales fell 4.0% from a year before in February, smaller than drops of 5.7% in January and 7.0% in 2009.

The governor of the Reserve Bank of Australia made more hawkish remarks in a TV interview, calling house price inflation high and suggesting that a return to more normal interest rates is a matter of some expediency.

South Korea’s current account swung into surplus by $158 million last month from a $448 million deficit in January.

Scheduled U.S. data include personal income and consumption and the Dallas Fed activity index.  This week will be dominated by the March jobs report.  Note that such gets released on Good Friday, when many other world markets will be closed.  Whisper numbers see a big gain, possibly of 300K in nonfarm payrolls.

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

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