Closing the Books on Another Year

December 31, 2010

The dollar is modestly lower in thin yearend trading, with overnight losses of 0.7% against the kiwi, 0.6% relative to the euro, 0.4% against sterling, 0.2% against the yen, yuan and Canadian dollar, and 0.1% versus the Australian dollar.  Emerging market currencies by and large rose against the dollar on this final day of the year.  The won closed out 2010 with five consecutive appreciating sessions.

It’s been a year of euro and sterling weakness, not dollar strength.  As of 11:30 GMT, the U.S. currency had declined since end-2009 by 12.6% against the yen, 11.7% against the Australian dollar, 9.6% relative to the Swiss franc, 6.4% versus the kiwi, 4.8% against the Canadian dollar, and 3.5% relative to the Chinese yuan.  But the euro and British pound are trading 6.6% and 4.2% lower against the dollar than a year ago.

Many stock markets were closed today, including those in Japan, Germany, Switzerland, Italy, Spain, Sweden, Malaysia and the Philippines.  The U.S. market will be open, but no U.S. data releases are scheduled.  The Treasury market will shut early.  British markets have closed already after a half day.  The British Ftse and Paris Cac lost 0.5% today.  In the Pacific Rim, equities advanced 2.1% in China, 0.7% in Taiwan, 0.6% in India, 0.4% in South Korea, and 0.2% in Hong Kong.  Losses today were registered in Australia (0.9%), New Zealand and Singapore (0.7% each), and Thailand (0.2%).

Emerging market stocks capped their best two-year advance in 21 years.

Copper climbed over 1% on this final day of 2010 to yet another record high and shows a 29% advance for the year.  Cotton easily outpaced the gains in copper both today and in 2010 as a whole.  Gold prices are up 0.4% on the day and almost 29% on the year.  Silver is 82% stronger than a year ago. Oil slid 0.2% so far today and is hovering just below $90 per barrel again, but it’s 13% higher than at end-2009.

The yield on ten-year British gilts fell six basis points to 3.41%.  In Japan, which is closed today and Monday, the 10-year JGB is quoted at 1.12%, off a tick.  Ten-year Treasury futures are 3.34%, and their German bund counterpart is yielding 2.96%.

Private credit in Australia rose slightly more strongly in November than expected, gaining 0.3% on month and 3.6% on year after a 12-month increase in October of 3.3%.

South Korean consumer prices advanced 0.6% in December, lifting the on-year pace to 3.5% from 3.3%.  Malaysian producer prices jumped 1.7% in November and continued to show an on-year 6.3%  pace of rise.

Indonesia’s trade surplus in November was nearly 58% wider than the October surplus. 

South African M3 growth accelerated more sharply than expected to a 12-month gain of 7.2% in November from 6.4% in October.  Domestic credit growth slowed, however, to 4.6% from 5.1%.  The South African trade balance unexpectedly swung to a ZAR 8.4 billion surplus last month from a ZAR 3.2 billion deficit in October.

India’s current account deficit widened 30.6% to $15.8 billion in 3Q10 compared to 2Ql.  Hong Kong M3 money was 7.1% greater than a year earlier in November. 

The British Nationwide house price index in December posted its first month-on-month increase, 0.4%, since May, but the on-year increase remained at 0.4%.  The three-month over three-month pace was negative 1.0%, pointing to a continuing downtrend at the start of 2011.  The measure had rallied in 2H09 and 1H10 and crested at a 12-month gain of 10.5% last April.  Still, the rate of decline is only moderate, unlike the plunging pace seen in 2008.

Czech M2 grew 3.6% in the year to November compared to a 4.1% rise in the year to November 2009.

Chinese central bank and political leaders made yearend statements that said nothing unexpected and provided the typical ying and yang.  Credit policy in 2011 will be prudent.  Fast growth is desired, but securing price stability will command increasing attention.

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

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