European Sovereign Debt Fears Send Yen and Dollar Higher Before Another Weekend

May 14, 2010

The yen firmed 0.2% against the dollar, which otherwise advanced 0.6% against sterling and the Swiss franc and 0.5% against the euro, which got as low as $1.2430, slightly below its weakest quote last year of 1.2458 seen on March 4, 2009.

Commodity-sensitive currencies were also depressed.  The Canadian and Australian dollars lost 0.5% against the greenback, and the kiwi is off 0.4%.

Stocks continue to get crushed.  Equities fell 1.9% in India, 1.5% in Japan, 1.4% in Hong Kong, 0.9% in Australia and 0.7% in China.  The Paris Cac has slumped 2.9% so far today, and the British Ftse and German Dax show declines of 1.9% and 1.4%.

This flight to safety pushed gold up 1.0%, and bond yields are down six basis points in Germany and Britain.  The 10-year JGB slid 2 basis points.

Oil sank 2.1% to $72.84 per barrel and had dropped by $13.35 or 15.5% since Monday, May 3rd.

Not much data were released overnight.  European governments cannot stem speculation the euro is headed for a break-up and that taxpayers and major banks in the region will be victimized by the process of debt defaults and restructuring.

The United States releases retail sales, industrial production, business inventories, and the U. Michigan index of consumer sentiment later today.  Canada will be reported results of the latest monthly manufacturing survey.

Hong Kong GDP rose 2.4% last quarter.  On-year growth accelerated to 8.2% from 2.6% in 4Q09.

Wholesale price inflation in India slid t0 9.6% last month from an on-year pace of 9.9% in March.

Retail sales in Singapore fell 1.4% in March and by 2.4% from a year before.  The drop in non-auto sales was only 0.3%, and such posted a 7.2% gain from April 2009.

There was more street strife in Thailand overnight.

Foreign direct investment in China was 11.3% greater than a year earlier in January-April.

South Korean import prices rose 1.2% in April and 5.1% from a year earlier.  Export prices slid 0.2% and by 6.7% from April 2009.

New Zealand retail sales in March were disappointing, recovering just 0.5% compared to an expected 1.2% increase.  Non-auto sales rose 1.1% after dropping 0.9% in February.  News of a 0.4% decline in home price also dampened speculation that the New Zealand central bank can begin to tighten monetary policy just yet.

Consumer prices in Italy rose 0.4% on month and 1.5% on year in April.  Spain’s CPI last month advanced 1.1% and by 1.5% from a year earlier.  Finnish consumer prices increased 1.1% in April and by 0.9% on year.

Britain’s index of leading economic indicators posted a bigger 1.0% increase in March than the 0.6% advance in February.

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



Comments are closed.