Dollar Again Lower

April 29, 2011

The dollar has fallen 0.8% against the Swiss franc and by 0.4% versus the kiwi, 0.2% relative to the yen, yuan and euro and 0.1% against the Canadian dollar, Australian dollar, and sterling.  The yuan is stronger than CNY 6.500 for the first time since 1993, reaching as far at 6.4892.

President of the Swiss National Bank Hildebrand made very bullish remarks about domestic Swiss growth staying vigorous in spite of the franc’s strength and also observed that price risks are building even though inflation is moderate at the moment.

The Japanese market was shut for the first of the Golden Week holidays.  British markets also are closed for the Royal Wedding.

Share prices are mixed, with drops of 1.0% in Australia, 0.8% in India, 0.7% in South Korea and 0.4% in Hong Kong and Taiwan but rises of 1.0% in China and the Philippines, 1.5% in Vietnam, 1.1% in Pakistan and 0.4% in New Zealand.  In Europe, the Dax is up 0.3%, but the Paris Cac has slid 0.2%.

Gold prices strengthened 0.4% to $1537.20 per ounce, while oil is 0.2% lower at $112.63 per barrel.

The 10-year German bund yield firmed a basis point to 3.27%.

Two central banks tightened monetary policy today.

  • Russia’s refinancing rates was unexpectedly lifted 25 basis points to 8.25% as Bank Russii officials cited elevated inflation expectations.
  • Vietnam’s refinancing rate was raised by a full percentage point to 14% from 13%.

Business sentiment in the euro area fell back to a 106.2 reading in April.  That was the second straight decline from 107.3 in March and 107.9 in February and the lowest score since November.  Consumer confidence dropped a whole point to minus 11.6.  Industrial confidence printed at 5.8 after 6.7 in March.  Sentiment in the services sector fell by 0.4 to 10.4, and that in retail did likewise to minus 1.8.  The reading for construction remained very depressed at minus 24.2, same as in February but a bit better than March’s of minus 25.4.  A separate business climate index for the group fell to 1.28, lowest since December, after scores of 1.43 in March and 1.45 in February.

Euroland’s retail purchasing managers index dropped to 52.2 from 53.5 in March and 55.8 in January, which had been the best result in nearly five years.  The decline in April happened in spite of a 1.6-point rise in Germany’s retail PMI to 54.6.  The French index declined 3.3 points to 56.3, while Italy’s reading was 2.7 points lower at a ten-month low of 43.1.

Euroland’s jobless rate stayed at 9.9% last month.  It had been at 10.0% at the start of this year and 10.1% in March 2010.

Euroland CPI inflation accelerated to 2.8% in April from 2.7% in March according to the preliminary flash estimate.

Euro area M3 in March was 2.3% higher than a year earlier, accelerating from a 2.% on-year advance in February.  M3 was 2.0% greater in 1Q11 than in the final quarter of 2010.  Private loans and credit posted on-year increases of 2.5% and 2.2% in March.  Loans to firms and for mortgages wee 0.8% and 4.4% stronger than a year earlier.

The euro area index of leading economic indicators fell 0.5% last month, and the index of coincident indicators stagnated.  The grinding rise of the euro isn’t helping the regional economy.  The peripheral members are especially in dire straights.  The Greek minus German 10-year bond premium went above 1300 basis points this week, widening by about 350 basis points in just the span of two weeks.

German retail sales suffered a serious setback in March.  Their volume fell 2.1% on month and by 3.5% from March 2010.  They had also dipped slightly in February and thus were only 0.2% stronger in the first quarter than in 4Q10.

French producer prices increased 0.9% in March and by 6.6% on year, exceeding analyst expectations.  Italy’s PPI went up 0.7% and by 5.7% from March 2010.  Italy’s consumer price index was 0.5% higher on month in April and accelerated to a 2.6% twelve-month rate of climb (3.0% if harmonized to regional accounting standards).  Italy had an 8.3% unemployment rate last month.  Spanish harmonized CPI inflation rose in April to 3.5% from 3.3% in March.  Spain also reported a 21.3% jobless rate in the first quarter of this year, up from 20.3% in 4Q10 and the worst level since 1997.  Spanish retail sales volume in March was 8.6% weaker than a year earlier when adjusted for variations in the number of working days. 

The Swiss index of leading economic indicators edged higher to 2.29 in April from 2.25 in March.  Swedish retail sales were weaker than assumed in March, falling 0.8% on month instead of rising marginally as predicted. Hungarian producer prices were unchanged on month in March but rose in year-over-year terms by 6.6% versus a gain of 6.3% in February.  Czech M2 money grew 2.5% in the year to March.  Portuguese consumer confidence printed weakly at minus 54.0 in April after minus 47.7 in March, and retail sales in that economy suffered a 6.6% drop between March 2010 and March 2011.  Greek retail sales were 7% lower than a year before in February.

China’s manufacturing purchasing managers index in April of 51.8 was unrevised from the preliminary estimate and at the same level as the March reading, but it remained below a long-term average score of 52.3.  The lowest input price inflation component in eight months, however, suggests that monetary restraint is indeed having a beneficial effect.

New Zealand’s NZD 464 million trade surplus in March was 2.4 times wider than the surplus in February, which had been adversely affected by the South Island’s earthquake.  New Zealand M3 money was 5.6% higher in March than a year earlier.  Private credit in Australia grew 3.6% in the year to March, while M3 money posted a 7.6% advance.

Singapore producer prices jumped 2.5% in March and by 8.8% on year.  Singapore had only 1.9% unemployment last quarter.  Malaysian producer price inflation accelerated to 10.6% in March from 9.8% in February.  M2 money growth in Hong Kong slowed from an 8.0% on-year pace in February to 7.2% in March.  GDP in Taiwan grew by a faster-than-expected 6.2% between the first quarter of 2010 and the first quarter of this year. 

South African private credit and M3 money respectively recorded on-year gains of 5.1% and 6.5% in March.  Each increase was less than forecast.

Fed Chairman Bernanke again speaks publicly today but is unlikely to reveal more about his thoughts on the dollar and other monetary policy matters than he did at Wednesday’s press conference.  The U.S. will be reporting personal income and spending, the Chicago and Milwaukee PMI surveys, the employment cost index, the NAPM New York manufacturing index, and the U. Michigan consumer sentiment measure.  Canada will be releasing monthly GDP.

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

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