Dollar and Pound Softer

September 20, 2010

Typical of many Mondays, the week kicked off with a light data calendar, plus trading volume was lightened by the closure of Japan in observance of Respect for the Aged Day.  Japanese markets have another holiday on Tuesday.  Investors are mostly looking ahead to Tuesday’s FOMC meeting, where the chance of quantitative easing being unveiled is considered to be diminishing.  Meanwhile, the National Association of Home Builders index is due today.

The dollar lost 0.9% against the Australian dollar, which got a boost from hawkish remarks by central bank governor Stevens.  The dollar also lost 0.6% against the Swiss franc, 0.5% against the New Zealand dollar, 0.4% relative to the euro, 0.3% against the Canadian dollar, 0.2% versus the Chinese yuan and 0.1% against the Japanese yen.

Sterling, off 0.1%, was the only major currency to underperform the dollar.  British data releases highlighted a softening rate of growth.

  • Britain’s Rightmove house price index fell 1.1% in September and by 3.4% in the past three reported months.
  • U.K. mortgage approvals of 45K last month were less than anticipated.  The value of mortgage lending sagged to Gbp 5.9 billion.
  • British on-year M4 growth slowed to a record low of 1.8% in August from 2.3% in July.

Stocks closed mixed in the Pacific Rim but are higher in Europe where the German Dax, Paris Cac and British Ftse show gains of 0.7%, 1.0% and 1.1%.  Stocks rose by 1.6% in India, 0.4% in Taiwan, 0.3% in South Korea and 0.2% in New Zealand but eased by 0.4% in Indonesia and China and by 0.2% in Australia.

Ten-year German bund and British gilt yields firmed by four and one basis points.

Oil prices are steady at $73.65 per barrel. Gold advanced 0.3% to $1280.90 per troy ounce.

A boat dispute between China and Japan escalated, as Beijing broke off senior-level diplomatic ties with Tokyo.

Taiwanese export orders recorded on-year growth of 23.3% last month after gaining 18.2% in the year to July.

Italy’s EUR 1.75 billion trade surplus in July was better than anticipated.  Dutch consumer confidence weakened in August to minus 14 from minus 11 in July.

Australian Governor Stevens said more interest rate increases would be necessary unless potential downside growth risks in fact materialize, but he looks for a continued elevated terms of trade in Australia, which should keep the economy comparatively buoyant.  The Aussie dollar is hovering around two-year highs.

Scheduled North American data on Monday include the NAHB index from the United States and Canadian wholesale sales and international transactions.

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



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