Dollar and Yen Up as Investors Opt for Greater Safety

April 27, 2010

The dollar has risen 0.7% against sterling, 0.5% against the euro, 0.4% relative to the Swiss franc, 0.3% versus the kiwi and 0.2% against the Australian dollar.  The Canadian dollar and yen are unchanged and up 0.3% against the greenback.  Investors fret that some EU governments won’t approve a bail-out of Greece or that it will fail to reduce Greek interest rates or stop the crisis from spreading to Portugal and others.  A different worry concerns the impact of government curbs on the Chinese property market.

Stocks fell by 2.0% in China, 1.5% in Hong Kong, 0.4% in Singapore, 0.3% in India and Thailand, and 0.2% in South Korea.  While the Nikkei closed 0.4% higher, stocks in Europe have been hard hit by the Greek crisis, with losses today of 1.4% in France, 0.9% in Britain and 0.6% in Germany.

Ten-year German bund and Japanese JGB yields are two basis points lower.  The Portuguese – German bond spread widened to 227 basis points, most in 13 years.

Oil prices fell 1.2% to $83.20 per barrel.  Gold prices slid 0.2% to $1151.90 per ounce.

Australian producer prices increased 1.0% in the first quarter, almost twice as much as consensus forecasts.  The on-year drop narrowed to 0.1% from 1.5% between 4Q08 and 4Q09.  Domestic producer prices went up 1.0% in 1Q10 and by 2.2% from a year earlier, while import prices increased 1.4% on the quarter but were 14.2% lower than a year earlier.

The indices of Australian business confidence and business conditions each fell a point last quarter to 17 and 8, respectively.

Japan’s Shoko Chukin index of small business sentiment improved to 46.8 in April, best since November 2007, from 45.8 in March, 42.3 in February, 41.3 in January and a quarterly average of 42.3 in 4Q09.  The manufacturing component of 48.1 was 0.2 points higher, while non-manufacturing advanced 1.6 points to 45.7.

The trade deficit of the Philippines narrowed 53% on month in February to $333 million.   Exports were 54.5% greater than a year before.  Imports rose 27.6%.

Hong Kong posted a bigger HK$ 38.9 billion trade deficit in March.  On-year growth of 32.1% in exports and 39.8% in imports exceeded expectations.

Taiwan’s index of leading economic indicators rose 0.3% in March, half as much as in February.

Consumer sentiment data were reported by Germany, France, and Italy.  The German index of 3.8 exceeded expectations of 3.2.  Italy’s reading of 107.9 was 1.6 points greater than in March and also surpassed forecasts of 106.6.  French consumer confidence slid unexpectedly, however, to minus 37 from minus 34 in March and forecasts of minus 33.

Business sentiment in the Netherlands improved to minus 1.4 in April from minus 3.1 the month before.

The British Bankers Association reported depressed and disappointing mortgage approvals of 34.9K in March versus 33.3K in February.  Analysts were expecting a rebound to 43.2K.  The monthly CBI survey of British retailers failed to improve as expected but instead had a steady and low reading of 13 in April, well below February’s score of 23 and no different from the readings last November and December.

Odds makers in Britain are attaching greater probability to a hung parliament after parliamentary elections on May 6.  Sterling lost ground against the euro as well as the dollar overnight.

German import prices jumped 1.7% on month in March after increasing 1.0% in February and 1.7% in January.  The first-quarter annualized pace of increases was thus 12.2%, and on-year import price inflation doubled to 5.0%.  Such had been minus 8.1% just six months earlier.  Energy was mostly to blame for the year-on-year advance.  Non-oil import prices rose 1.1% on month but just 0.7% on year.

Swedish producer prices fell 1.5% in March and by 1.7% from a year earlier.  The domestic component dropped 1.7% on month but posted a 2.1% on-year rise.

The UBS Swiss consumption indicator climbed to a 20-month high of 1.7 in March from 1.2 in February.

Scheduled U.S. data today included the Conference Board consumer sentiment index, the Case-Shiller home price index, the Richmond Fed index and the weekly chain store sales figures from ICSC and Johnson-Redbook.  The FOMC’s third interest rate policy announcement of 2010 is due Wednesday at around 18:15 GMT (14:15 EDT).

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

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