Lots of Data to Process, But Sinking Dollar Remains a Constant

October 1, 2010

On the first day of a new calendar quarter, the dollar so far has lost another 0.7% against sterling, the euro, and kiwi, 0.4% against the yen, Swissy, and Australian dollar and 0.2% relative to the Canadian dollar.  The yuan is steady.

Stocks got off to a goods start after a superb September, rising 2.1% in China, 1.9% in India, 1.3% in Indonesia, 1.1% in Singapore, 0.9% in Pakistan, 0.7% in New Zealand, and 0.3% in South Korea.  In Europe, the British Ftse, German Dax, and Paris Cac are trading 1.1%, 0.9%, and 0.7% higher.

Ten-year gilt, bund, and JGB yields have risen by 3, 2, and 2 basis points.  With German bund yields higher, peripheral bond yield spreads narrowed a bit.

Oil jumped 1.3%, catapulting above $80 per barrel to $80.98Gold gained another 0.7% to $1318.10 per troy ounce.

Japanese labor statistics showed some improvement, as the jobless rate dipped to 5.1% in August from 5.2% in July and 5.3% in June, while the job offers ratio continued its upward creep, reaching 0.54 from 0.53 in July and 0.48 last April.  However, employment which was unchanged in the year to July, was 0.3% lower in August than a year earlier.

Japanese real household spending volume advanced 0.7% between July and August, raising the 12-month rate of gain to 1.7% from 1.1%.  Real disposable income grew 0.6% on year after a 0.3% dip in the year to July.

Japanese seasonally adjusted consumer prices fell 0.3% on month in August, just as such had done in July.  Non-food CPI dipped 0.1% from July after monthly declines of 0.3% in July and 0.1% in June.  Non-energy, non-food consumer prices edged 0.1% lower for a second straight month.  12-month rates of CPI deflation were 0.9% for both all items and the index that excludes seasonal food and energy.  On-year Tokyo CPI deflation, however, narrowed to 0.6% in September from 1.0% in August.

Like a broken record, Germany reported weaker-than-forecast retail sales yet again.  The volume of sales fell 0.2% in August after a drop of 0.4% in July and no change in June.  The 12-month rate of rise was 2.2% in August, down from 4.9% in June.  Sales in July-August were 0.1% lower than the 2Q average level.

Swiss retail sales were only 0.5% higher than a year earlier in August on a volume basis.  Danish retail sales in August advanced 0.4% on month but fell 0.7% from a year before.

Euroland’s jobless rate, which previously had been reported at 10.0% for May, June and July, was revised upward to 10.1% for all three months, and it remained at 10.1% in August.  That’s 0.4 percentage points higher than in August 2009.

Manufacturing-sector purchasing manager survey results for September were released covering numerous economies.

  • Euroland’s 53.7 reading was a tenth above the flash indication but down from 55.1 in August and 56.7 in July.  Manufacturing appears to be running at no more than a third the rate of growth seen earlier in 2010, and the slowdown at the end of the third quarter was very abrupt.
  • Within the euro area, Germany’s index of 55.1 was down from 58.2 in August and an average score of 59.4 in the second quarter.  Italy’s index slid to a seven-month low of 52.6 from 52.8 in August.  Spain’s reading of 49.6 signaled outright contraction for the first time since February. Ireland’s index was also below 50 compared to readings of 51.1 in August and 54.4 in May.  The Greek index of 44.7, although better than 43.0 in August and 41.8 in May, still conveys a deep recession.  The Dutch index of 52.9 was 1.4 points below the August reading and well below earlier scores of 57.8 in April and 56.3 in May.  A rare bright spot was the improved French index of 56.0, a 5-month high, after 55.1 in August,
  • The British PMI reading dropped a full point as expected to a 10-month low of 53.4.  Such had averaged 57.9 in the second quarter.
  • In Australia, where the currency is soaring and interest rates have already been lifted 150 basis points by the central bank, the PMI index fell below the 50 break-even line to 47.3 in September compared to 51.7 in August, 54.4 in July, and 56.3 in May.
  • South Korea’s PMI reading of 48.8 after 50.9 in August and 57.1 last April was below 50 for the first time in 19 months.  Such reflects a firm won.
  • Taiwan’s PMI stayed below 50, printing at 49.0 after 49.2 in August, 50.5 in July, 53.8 in June, and 57.4 in May.
  • The government of China’s PMI reading bucked the trend of most countries, climbing more than expected to 53.8 from 51.7 in August and 49.4 in July.  A separate Chinese PMI index maintained by HSBC had also improved in September, rising a full point to 52.9.
  • Among some East European economies, the Czech PMI rose from 57.3 in August to 58.0 in September, best in three years. Poland’s PMI rose 0.9 points to 54.7, highest since November 2006.  Hungary’s PMI fell 1.7 points to 50.2, however, and Russia’s index also fell 1.7 points to 51.2, lowest since March.
  • The Swiss PMI reading of 59.7 was down from 61.4 in August and 66.9 in July.  Switzerland does considerable trade with Germany.
  • Sweden’s PMI rebounded to 63.3 after falling to 60.6 in August from 64.2 in July.
  • Norway’s PMI also bounced back, rising to 52.9 after dropping 5.5 points to 49.4 in August.  The Danish PMI fell to 50.6 from 53.7.
  • South Africa’s 48.4 reading was down from 50.3 in August and the third sub-50 result in the last four months.  The rand has also risen sharply.
  • Turkey’s PMI eased a full point to 50.3, a 17-month low.

Consumer price inflation in Thailand decelerated to 3.0% in September from 3.3% in August.  Core slid to 1.1% from 1.2%.  Indonesian consumer price inflation settled back to 5.8% in September from 6.4% in August, and core CPI inflation eased to 4.0% from 4.2%.  South Korean consumer prices climbed 1.1% on month in September (the most since March 2003) and to 3.6% on year from 2.6% in the year to August.  Core CPI in South Korea edged up to 1.9% form 1.8% in August.

India’s trade deficit of $13 billion in August was 46% wider than a year earlier.  On-year import growth of 32.2% exceeded the 22.5% rise in exports.

GBP 6.2 billion of home equity withdrawals in the U.K. during the second quarter were much greater than anticipated.

Market players are wary of the likelihood of more quantitative easing coming to America, Britain, and Japan.

Scheduled U.S. data today feature the manufacturing purchasing managers index, construction spending, the U. Michigan index of consumer sentiment, personal income and expenditure, and motor vehicle sales.

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



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