Yen and Dollar Up on Relentless Jitters About Greece

April 8, 2010

Greek-German rate spreads widened further ahead of ECB press conference.

Stocks suffered their biggest losses in quite some time.  Equities lost 3.5% in Thailand, 1.7% in Indonesia, 1.4% in India, 1.1% in Japan, 1.2% in China, 0.9% in Malaysia, 0.8% in Taiwan and 0.5% in Hong Kong and New Zealand.  The Paris Cac is off 1.6%, and the German Dax and British Ftse are 1.2% and 1.1% lower.

The yen gained 0.5% against the dollar and 0.7% versus the euro.  The dollar shows advances of 0.6% against the kiwi, 0.3% relative to the Aussie dollar, 0.2% against sterling, the Canadian dollar and the euro, and 0.1% versus the Swiss franc.

Ten-year sovereign debt yields fell by 5, 4, and 2 basis points in Britain, Germany, and Japan.

Oil and gold prices slid 0.5% to $85.44 per barrel and $1147.70 per troy ounce.

The Bank of England as expected kept a 0.5% Bank Rate and made no change in its asset purchase facility, which was suspended after January.

German industrial production disappointingly was unchanged in February, and January’s rise got revised to 0.1% from 0.6% reported last month.  Consumer goods output fell 2.3%, and energy production dropped 1.7%.  Output in January-February was 0.3% lower than the 4Q09 average level.

British industrial production climbed 1.0% in February, twice as much as forecast, and gained 0.8% in the three months to February versus the prior 3 months.  Manufacturing increased 1.3% in the latest month and 1.4% from a year earlier.

Many other countries reported February industrial production, too.  Such fell 2.5% in Romania but rose 1.4% from a year earlier. Hungarian output declined 1.7% on month but rose 8.4% on year.  Turkish production increased 0.5% on month and 18.1% on year.  Malaysian output slumped 11% from January but was 4.9% greater than in February 2009.  Spanish industrial production was 1.9% lower than a year earlier in February.

Euroland retail sales declined 0.6% in February, the worst result in at least a half year, and were down 1.1% on year.  Sales of food slumped 1.6%.  Retail sales in January-February were 0.1% lower than their 4Q09 level.  Portugal reported a 3.4% on-month drop.

Geithner is on a trip to Hong Kong and then Beijing, fanning speculation that the yuan will soon be untethered from its fixed dollar value.

Japan released several indicators:

  • A smaller-than-expected current account surplus of Y 1.47 trillion was posted in February, 29.6% wider than a year earlier nevertheless.  Merchandise exports and imports grew from a year before by 47.3% and 31.6%.  Imports had only risen 7.1% in the year to January.  The seasonally adjusted current account surplus was Y 1.12 trillion, 34.7% narrower than in January, with exports falling 3.9% on month.
  • Twenty-day trade figures for March indicated on-year increases of 49.5% in exports versus 20.5% in imports.
  • Stock and bond transactions generated a 2.28 trillion yen outflow in March.
  • Core domestic private machinery orders in February dropped 5.4% on top of a 3.7% decline in January and were 7.1% weaker than a year earlier.  Analysts had predicted a rise of nearly 4% on the month.  Foreign orders, however, increased 8.4%, reversing January’s 8.8% setback.
  • Machine tool orders accelerated to on-year growth of 262% in March from 217% in February.
  • The economy watchers index improved to 47.4 on the current conditions index from 42.1 in February and 38.8 in January.  The 1Q average score of 42.8 compares to 36.7 in the fourth quarter of 2009.  The outlook component also rose, reaching 47.0 from 44.8 in February and 41.9 in January.
  • The Bank of Japan released an unchanged economic assessment that activity is picking up due to foreign demand and policy support but has not yet obtained self-supporting momentum in domestic private demand.

Australian jobs grew 19.3K last month after a small dip in February, and the unemployment rate held at 5.3%.  Both results were close to expectations.

Swiss unemployment dipped further to 4.2% in March from 4.4% in February.

Britain’s Halifax index of house prices rose twice as much as expected last month, 1.1%, and recorded a 5.2% advance from March 2009.

South Korean M2 increased 8.8% in the year to February, down form 9.1% in January.  A broader monetary aggregate, “L”, went up 1.0% on month and 10.2% on year.  Taiwanese exports were 50.1% greater in March than a year earlier, but imports shot up 80.3%.

British new car registrations were 27% larger last month than a year earlier.  The French trade deficit widened to EUR 3.604 billion in February from EUR 3.534 billion in January.  France’s budget deficit in January-February of EUR 21.8 billion was 33.1% narrower than a year earlier. Dutch CPI inflation rose to 1.0% on year in March from 0.8% in February.

Business sentiment in South Africa edged up to 83.2 in March from 83.0 the month before.

The ECB press conference begins in an hour at 12:30 GMT.  The U.S. will report jobless insurance claims at the same time.  ICSC monthly chain store sales also get released today.

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



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