Stronger Dollar to Start Week

October 18, 2010

The dollar has recovered 1.0% against the loonie, 0.6% versus sterling, 0.4% against the euro, 0.3% vis-a-vis the Australian dollar, and 0.1% against the kiwi.  The greenback is steady against the yuan and 0.3% weaker relative to the yen.   The mostly firmer dollar follows Bernanke’s pre-weekend remarks that solidified the likelihood of Fed quantitative easing getting announced November 3rd, and it comes as traders await the release of U.S. data later today covering industrial production, housing, and international capital flows. 

Stocks fell by 1.8% in Taiwan, 1.2% in Hong Kong, 1.3% in Thailand, 0.8% in Indonesia and Australia and 0.7% in China and Singapore.  Japan’s Nikkei closed unchanged, and equities are also steady in France and Britain.  The Dax has edged 0.2% higher.

Ten-year yields on Japanese JGB’s and German bunds are unchanged.  The 10-year British gilt yield firmed one basis point.

Gold and oil prices settled back 0.7% and 0.2% to $1362.40 per troy ounce and $81.11 per barrel.

Consumer prices in New Zealand rose 1.1% last quarter, but their 12-month pace slowed to a six-year low of 1.5% from 1.8% in 2Q10 and 2.0% in the first quarter.

Australian motor vehicle sales rose 0.9% on month and by 8.6% on year in September.  The 12-month increase in August had been 10.5%.

Singapore’s non-oil exports posted a slightly slower on-year advance of 22.7% in September after gaining 30.8% in the year to August.

Japan’s tertiary index, a measure of service-sector activity, dipped 0.2% in August, but the July-August level was 1.3% greater than the 2Q level.  The tertiary index was 2.4% higher than in August 2009.  Department store sales in Japan, which have been posting on-year declines since February 2008, dropped 5.2% in the year to September after a decline of 3.2% between August 2009 and August 2010.  Tokyo department store sales fell 3.8% on year.

Consumer sentiment in Turkey improved to 90.4 in September from a reading of 87.4 in August.

Britain’s Rightmove house price index advanced 3.1% in October after declines of 0.6% in June, 1.7% in July and 1.1% in August.  Rightmove house price inflation from a year earlier was 2.9%, higher than September’s 2.6% but less than 4.3% in August.  Such had peaked at 6.1% last February.

ECB President Trichet indicated that purchases of member bonds would continue for now.  German Bundesbank President Weber had earlier implied a preference to discontinue those operations soon.

Scheduled U.S. data today are the Treasury’s report on international capital movements, known as the monthly TIC report, industrial production and capacity usage, and the National Association of Home Builders index.  Canada reports its securities transactions as well.

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



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