Kiwi Up, Swissy Weaker

January 13, 2011

The U.S. dollar advanced 0.7% against the Swiss franc but softened 0.5% against the New Zealand dollar.  The greenback otherwise edged up 0.2% against the Canadian dollar and 0.1% versus sterling and the yen but slid by 0.1% against the euro, yuan and Aussie dollar.  Officials fixed the yuan at its strongest U.S. dollar level since instituting a managed appreciation on July 21, 2005.

Equities rose 1.5% in Australia, Pakistan and Thailand, 1.2% in New Zealand, 0.7% in Japan and 0.5% in Hong Kong.  China’s bourse closed unchanged, and stocks are so far down 0.7% in London and 0.3% in Frankfurt.

Ten-year British gilt and German bund yields eased by three and two basis points, while their Japanese counterpart firmed two basis points.

Gold and oil prices fell by 0.6% and 0.3% to $1378.00 per ounce and $91.59 per barrel.

An official of the Swiss National Bank warned that Swiss franc strength could weaken the economy’s growth.

The Bank of Korea surprised analysts with a 25-basis point interest rate hike to 2.75%, citing risks of rising expected inflation.  This was the third such increase since July 2009.  See review.

The Bank of England and ECB announce interest rate decisions at 12:00 GMT and 12:45 GMT (see previews).  An ECB press conference is scheduled at 13:30 GMT, and Bank of England minutes will be released January 26.  The Central Bank of Chile also makes an interest rate announcement today.

Spanish and Italian debt sales today went fine, helping to alleviate the immediacy of the peripheral Euroland debt crisis.  Of course, the stepped up ECB support helped.  A long-term solution remains elusive.  One or more defaults particularly in Greece remains possible down the road.

Australian labor statistics were mixed.  The 5.0% jobless rate, down from 5.2% in December, was the lowest since January 2009.  But jobs in December only rose by 2.3K after gains of 54.6K in November and 29.7K in October.  Analysts had projected a rise of 25K in the latest month.

Japanese core domestic machinery orders fell 3.0% in November and were 6.9% lower in October-November than the third quarter.  Foreign machinery orders tumbled 17.8%, reversing a 16.0% increase in October.  On-year growth in machine tool orders was 63.5% in December, sharply less than the 104.2% advance in the year to November.  Both domestic and foreign demand slowed appreciably.

Swedish consumer prices rose 0.7% last month and accelerated to an on-year pace of 2.3% from 1.8% in November.  Core inflation also was 2.3%.  Finnish retail sales value rose 6.8% on year in November and by 5.5% in volume terms.

German wholesale prices shot up 1.8% last month, most since January 1989 and lifting the 12-month rate of increase to 9.5% from 7.8%.  Average WPI inflation in 2010 was 5.9% after a drop of 7.0% in 2009.

French consumer prices climbed 0.5% in December and by 1.8% from a year earlier, a tenth more than had been expected. 

Dutch retail sales posted on-year gains in November of 4.3% in value terms and 3.0% in volume.  Dutch industrial production was 5.1% greater than a year earlier in November after a gain of 5.2% in the year to October.  Industrial sales growth accelerated to a 12-month pace of 16.2%.

The Greek jobless rate rose to 13.5% in October from 12.6% in September and 9.8% a year earlier.  Danish industrial output was 2.6% higher than a year before in November, significantly less than the gain in October.  The Czech current account deficit of CZK 1.98 billion in November was 80% wider than a year earlier.

The United States and Canada will be releasing trade figures at 13:30 GMT.  Other U.S. releases today are weekly jobless insurance claims and monthly producer prices.  Attention will be on what ECB President Trichet has to say, but public comments by Fed Chairman Bernanke will also command some attention.

Copyright Larry Greenberg 2011.  All rights reserved.  No secondary distribution without express permission.

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