Softer Pound on a Quiet Day

September 6, 2010

Canadian and U.S. markets will be shut today for Labor Day holidays.

No meaningful data releases from markets that are open.

Main currency movements have been a 0.6% drop of sterling, a 0.4% further recovery of the kiwi, and a 0.3% advance of the Chinese yuan.

  • Market chatter surfaced that the Bank of England may announce new quantitative easing on Thursday.
  • Earthquake in Christchurch, New Zealand is perceived as signaling a need for infrastructure spending.
  • Yuan’s advance, the most in a day in three weeks, has been associated with Larry Summers’ visit to Beijing.

The dollar slid by 0.1% against the Swiss franc and 0.2% against the yen and Canadian dollar.  The greenback also edged up 0.1% against the euro.  The Thai baht touched its strongest level since the early days of the Asia debt crisis in 1997.  The Bank of Thailand raised its one-day repo rate by 25 basis points on August 25 to 1.75% in follow-up to similar moves in February and July and hinted at more tightening to come.  Thai growth exceeded expectations in 2Q10.

Norges Bank chief Gjedrem expect the Norwegian krone to lose some strength over time.

The Bank of Japan began a two day policy meeting.  The last meeting on August 30 of the Policy Board had been unscheduled and resulted in a rise of its bank loan facility to JPY 30 trillion from JPY 20 trillion.

The Japanese 10-year sovereign bond yield climbed another five basis points to 1.20% and is 29 basis points higher than on August 25.  Ten-year British gilt and German bund yields fell by three and two basis points, in contrast.

New car registrations in Britain were 17.5% lower in August than a year earlier.  Such had dropped 13.2% in the year to July after posting a 12% on-year increase in the second quarter.

The Sentix index of investor sentiment toward Euroland suffered an unexpected setback to 7.6 in September from 8.5 in August.

Australian job ad growth accelerated to 2.6% last month from 1.4% in July and were 36.1% greater than a year earlier.  A gauge of expected inflation crunched by TD Securities indicated upward drift to 3.0% over the coming twelve months from 2.8% in July’s survey.

Several Czech economic figures were releases.  A 1.0% on-year drop of retail sales in July surpassed expectations, but a 5.3% 12-month increase of industrial production fell short of forecasts.  The CZK 6.3 billion trade surplus was a touch wider than analysts had assumed.

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

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