Heavy Data Barrage But Not Much Currency Movement

March 1, 2011

The dollar shows gains of 0.3% against the yen and 0.2% relative to the kiwi.  The U.S. currency is unchanged against the yuan and Swiss franc and down 0.1% against sterling, the Canadian dollar, the euro and the Australian dollar.  Today see a slew of data releases and the spotlight on several central banks.

The impact of geopolitical fears continues to ebb, with stocks on this first day of March climbing 3.5% in India, 2.8% in Pakistan, 1.9% in Singapore, 1.5% in Taiwan, 1.2% in Indonesia and Japan, 0.7% in Malaysia and Thailand, 0.5% in China, and 0.3% in Hong Kong.  Equities so far are up 0.6% in Germany and 0.3% in France, but they are unchanged in London.

Ten-year sovereign debt yields rose six basis points in Japan, three bps in Britain, and one basis point in Germany.

Gold and oil prices firmed 0.7% and 0.3% to $1420.20 per ounce and $97.22 per barrel of West Texas Intermediate.

Fed Chairman Bernanke at 15:00 GMT today begins his semi-annual Humphrey Hawkins testimony before the Senate Banking Committee and appears tomorrow before the House in a reprise.  Investors await any definitive clues about the Fed’s plans for quantitative easing.  Will the full $600 of operations by June, QE2, be bought, and will there be a QE3?  Stay tuned.

The Reserve Bank of Australia left its Official Cash Rate unchanged at 4.75%, called policy mildly restrictive, and said it remains appropriate.

The Bank of Canada makes its second interest rate policy announcement at 14:00 GMT.  No change is expected.

Several Bank of England policymakers including Governor King and chief economist Charles Bean testify today in parliament.

Manufacturing purchasing manager survey results for February were released for many advanced and developing economies.

  • Euroland’s flash reading of 59.0 was not revised.  It’s the best score since June 2000 and compares with 57.3 in January and 53.8 in October.  Except in the cases of Greece and Ireland, however, input price indications were at survey peaks.
  • The German index was revised up a tenth to a record high of 62.7.  The French index was revised up four tenths to 55.7, signifying solid activity.
  • Italy’s reading of 59.0 after 56.6 in January included a survey high for export orders and the best overall orders reading since June 2006.
  • Spain’s index rose a tenth to 52.1 but embodied continuing weak domestic demand and intensifying inflation.
  • With an unchanged 42.8 reading, Greece remains mired in a deep policy-engineered recession.
  • Ireland’s PMI improved to 56.7 from 55.8 with orders near to an 11-year peak.
  • The Dutch PMI for manufacturing printed at a record high of 60.7, 3.2 points better than January’s reading.
  • The Polish PMI fell 1.8 points to 53.8, lowest since August, but jobs had their best indication since July 2007.
  • The Czech PMI of 59.8 was lower than January’s record high of 60.5 but above December’s 58.4.  PMI values of 50 constitute neutrality, so this remains a very vibrant score.
  • Hungary’s index advanced 2.3 points to 57.0, best since April 2007.
  • The Swiss PMI climbed to a two-year high of 63.5 from 60.5 in January.
  • The Swedish PMI of 60.9 remained above 60 but nonetheless represented a six-month low.
  • The Norwegian PMI improved to 58.7 from 55.8 and was the best score since October 2007.
  • The Danish index rose two points to 66.4.
  • The British index as expected held steady at 61.5, which is a series peak.
  • Australia’s PMI improved 4.4 points to 51.1, signaling a return to positive growth.
  • South Africa scored a 54.8 after 54.6 in January and 51.7 in December.  It was a ten-month high for South Africa.
  • Russia’s PMI rose to 55.2, best since January 2008, from 53.5.
  • India’s PMI of 57.9 was above both January’s 56.8 and the long-term series average of 56.1.
  • Turkey’s index climbed to 58.5 from 57.2 and represented a series high.
  • Taiwan’s PMI suffered one of the few big declines, dropping back to 55.8 from 59.6 in January.
  • Likewise, investors were disappointed to see China’s PMI, according to the HSBC measure, drop to a 7-month low of 51.7 from 54.5 in January.

Japan’s unemployment rate remained steady at 4.9% in January.  Jobs were 0.1% lower than a year earlier, but the job offers ratio improved to 0.61 from 0.57.  Analysts had expected the ratio to print at 0.58.  It bottomed in 3Q09 at 0.42.  Real Japanese household spending rose 1.0% on month after a 2.4% drop in December and recorded an on-year decline of 1.0% in January versus minus 3.3% in the year to December.  Real disposable incomes were 3.4% lower than a year earlier.  A separate release put wage earnings in January up 0.2% on year, a touch weaker than expected.

Euroland’s jobless rate slipped back into single digits, 9.9% in January after 10% in November-December and 10.1% in October.  A three-tenths decline in youth unemployment to 19.9% accounted for the improvement.

German unemployment plunged 52K seasonally adjusted in February, roughly three times more than the forecast drop.  This caused the jobless rate to ease to 7.3% from 7.4% in January.  Employment in January was 1.2% greater than a year earlier, accelerating from on-year growth of 1.0% in 4Q10 and 0.8% in 3Q10.

Italian unemployment remained at 8.6% in January.  Consumer prices in Euroland’s third largest economy rose 0.3% in February and by 2.4% on year.

Euroland reported its flash estimate for February CPI inflation, showing an uptick to 2.4% on year from 2.3% in January.

Britain’s Nationwide house price index firmed 0.3% on month in February, trimming the 12-month rate of decrease to 0.1% from 1.4% in January.  U.K. M4 money contracted 1.7% between January 2010 and January 2011.  The December-over-December decline had been 1.5%.  45.7K mortgages were approved in January versus 42.7K in December.  Only a marginal improvement had been expected.  The value of net mortgage lending was GBP 1.8 billion.

The Greek trade deficit widened 28% on month in December to EUR 1.88 billion.  Hungarian producer price inflation settled back to 7.0% in January from 8.1% in December.  Icelandic consumer price inflation slowed to 2.2% from 3.5% in December.  Danish retail sales firmed 0.2% on month and 0.7% on year in January.

Swiss real GDP increased 0.9% last quarter, twice as much as assumed, and was 3.1% greater than in 4Q09, accelerating from on-year growth of 2.6% in 3Q.

India’s trade deficit widened threefold on month to $7.99 billion in January. Indonesian consumer price inflation eased to 6.8% in February from 7.0% in January. 

Australian commodity prices soared 47.8% between January 2010 and January 2011.  The Australian current account widened to 7.299 billion Aussie dollars in the fourth quarter from a downward revised AUD 6.49 billion in 3Q10.  Retail sales rose 0.4% in January, twice as much as the monthly increase in December.  Retail sales were 2.0% higher than a year earlier.  New Zealand M3 growth accelerated to 4.4% on year in January from 3.3% in December.

Scheduled U.S. data today include weekly chain store sales and monthly construction spending, auto sales, and the manufacturing purchasing managers survey.

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

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