Rate Hike in Australia and More Concerns About Greek Debt

April 6, 2010

The dollar jumped 0.9% against sterling and 0.6% against the euro and Swissy.  Sterling was hurt by an ICM poll giving the Tories only a 4 percentage point lead over Labour, thus suggesting a hung parliament after spring elections.  Signs of unraveling in contingency plans to involve the IMF with EU countries in a bailout of Greece weighed on the euro.  The Swissy moved in lock-step with the latter following last week’s intervention by the Swiss National Bank.

The dollar slid 0.2% against the Australian and Canadian dollars.  The Reserve Bank of Australia’s Official Cash Rate was raised another 25 basis points to 4.25% despite some weaker-than-assumed data over the past month.  The loonie edged through parity against its U.S. counterpart.  The greenback rose 0.5% relative to the kiwi, which slid under USD 0.7000.  The dollar also fell 0.5% against the yen.

European centers are completely open after the Easter holidays, but Hong Kong and Thailand were shut.  In the Pacific Rim, the Nikkei fell 0.5%, but stocks rose 0.9% in Australia, 2.3% in Sri Lanka, and 0.8% in Taiwan.  The British Ftse, Paris Cac, and German Dax have traded up 0.6%, 0.5%, and 0.2%.

After the long holiday, ten-year gilt and bund yields are up 7 and 5 basis points a piece, while the 10-year JGB yield of 1.40% edged 1 bp higher.

Oil settled back 0.3% to $86.36 per barrel but remains 3.1% higher than its closing in March.  Likewise, gold lost 0.8% but is still 1.0% stronger than at end-1Q10.

Japan’s index of leading economic indicators rose 1.2 points in February to 97.9, highest since July 2007 and up from 74.5 in February 2009.  The coincident indicator index increased 0.6 to 100.7, best since July 2008.  The lagging index firmed 0.5 to a 10-month high.

Analysts had been divided over whether the Reserve Bank of Australia would implement a fifth rate hike, which it did, or pause this month.  The statement from monetary officials said the decision to raise its rate another 25 bps was a “further step in the process,” implying that more increases lie ahead.

Bank Indonesia left its benchmark interest rate unchanged at 6.5% as analysts expected and indicated no increase would occur in the next few months.  The onset of tightening is contingent on the evolution of CPI data.

The British PMI-construction index jumped 4.6 points to 53.1 in March, surpassing 50 for the first time since February 2008.

Norway’s manufacturing PMI rose in March to 49.6 from 49.4 in February and 47.6 in December.  Denmark’s purchasing managers index (PMI) was 54.3 in March after 54.4 in February.  Danish retail sales firmed 0.4% in February but were 0.8% lower than a year earlier.  Czech retail sales recorded a smaller 2.1% on-year drop in February than had been forecast.  The Czech trade surplus widened 6.7% on month and 64.3% on year to CZK 15.33 billion in February.

Swiss consumer prices firmed 0.1% last month and recorded a 12-month rise of 1.4% as expected after 0.9% in the year to February.  Low inflation enables officials to justify intervention.

Filipino consumer prices firmed 0.2% in March and were 4.4% higher than a year earlier.  Taiwanese consumer prices dipped 1.0% in March and slowed to a 12-month rate of rise of 1.27% from 2.35% in February.  Taiwan’s WPI rose 0.3% on month and 6.6% on year in March.  New Zealand’s commodity price index printed at 1.8 in March, down from 3.8 in February.

China posted composite and service-sector PMI scores in March of 58.4 and 58.7, respectively, with the best new orders reading since November 2005.  China’s foreign minister rejected the charge of “currency manipulator.”

The Sentix Investor Index for Euroland improved to 2.5 in April from minus 7.5 in March, posting the first black-ink reading since May 2008.

According to Bank of England data, house equity withdrawals amounted to Gbp 4.0 billion in 4Q09.

South African motor vehicle sales were 15.0% greater than a year earlier in March.  February had seen such climb 16.2%.

FOMC minutes get released today.  Kocherlakota of the Fed will be speaking.

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



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