Dollar Snaps Higher

December 6, 2010

The dollar has largely reversed Friday’s post-jobs decline.  The greenback rose overnight by 1.1% against the euro, 1.0% versus the Swiss franc, 0.8% relative to the kiwi, 0.7% against sterling and the Australian dollar, 0.4% vis-a-vis the Canadian dollar and 0.3% against the yen.  China’s yuan is 0.2% higher versus the dollar.

There’s been few data releases.  Major news was Bernanke’s interview on 60 Minutes in which QE2 was defended.  The Fed chairman refuted such constituted the printing of money, cited slow money growth.  Future policy is contingent upon the economy’s performance.  Growth is not much faster than bare minimum needed to forestall new deterioration in the labor market, but he expressed optimism about the 10-20 year view of the U.S. economy.

Stocks rose 0.9% in Taiwan, 0.7% in Indonesia, 0.3% in New Zealand and Pakistan, and 0.2% in China but fell by 0.4% in Hong Kong, 0.2% in South Korea, and 0.1% in Australia and Japan.  European stocks show overnight losses of 0.6% in France and 0.2% in Germany and Britain.

Ten-year sovereign debt yields dropped six basis points in Japan and two bps in Germany and Britain.

Oil prices softened 0.6% to $88.69 per barrel, while gold prices firmed 0.5% to $1413.30 per troy ounce.

The Sentix index of investor sentiment toward the euro area weakened to 9.7 in December on peripheral sovereign debt concerns following an improvement to 14.0 in November from 8.8 in October and 7.6 in September.

Led by civil engineering and commercial sector activity, Germany’s construction purchasing managers index improved to 53.8 in November from 51.7 in October.

The EU productivity PMI index softened for a seventh straight month, dropping to 52.4 in November from 52.7 in October, but remained above the 50 line of demarcation between expansion and contraction.

British new car registrations in November were 11.52% lower than a year earlier.  However, January-November car sales still show an on-year increase of 3.4%.

Euroland finance ministers meeting tomorrow appear divided over the matter of an increase in the pooled rescue fund for troubled sovereign debt markets.

Official consumer and producer price data in Australia are reported on a quarterly basis, but a TD-MI monthly CPI indication for November pointed to further acceleration in the fourth quarter.  The index rose 0.4% on month in November after gaining 0.3% in October and 0.1% in September.  The 12-month rate of increase accelerated to a well-above-target 3.9% from 3.8%, and core inflation reached the target ceiling of 3.0%.  Australian job ads climbed 2.9% in November, four time faster than the gain in October.  The Reserve Bank of Australia unveils its monthly rate decision, and analysts do not expect a further rise in the 4.75% cash rate.  However, these figures point to a shorter, rather than longer, duration of pause.

Taiwanese CPI inflation of 1.5% in November exceeded expectations.  The WPI was 2.4% greater than a year earlier.

Moody’s cut Hungary’s credit rating to Baa1.

Saudi Arabia’s purchasing managers index rose to 62.2 in November from 59.9 in October and 58.4 in September.  The United Arab Emirates’ PMI slid back to 52.9 from a record high in October of 53.8, but the orders and production sub-components remained well above 50.

No U.S. data releases are planned today.  President Obama has made minimal demands including extended jobless benefits for any tax bill that he will sign.  Canada reports building permits and the IVEY-PMI index later today.

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



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