Dollar Struggles Continue

June 7, 2011

The dollar fell 1.0% against the New Zealand dollar, 0.7% versus the euro, 0.6% against the Canadian dollar, 0.5% relative to sterling and 0.3% versus the Swiss franc.  The greenback is unchanged against the Australian dollar and 0.1% firmer relative to the yen.

A senior Chinese official, Guan Ho, warned that the dollar is likely to depreciate further against other major currencies.

Equities rose 0.7% in Japan, 0.6% in China, and 0.4% in India, but they dropped 1.1% in Thailand, 0.7% in South Korea and 0.1% in Australia.  The German Dax and Paris Cac are so far up by 0.7%, and the British Ftse has gained 0.3%.

The yields on 10-year German bunds and British gilts rose two basis points, and that on JGBs is a basis point higher.

Gold prices firmed 0.2% to $1550.10 per troy ounce.  Oil prices are unchanged at $98.97 per barrel.

The Reserve Bank of Australia left the Official Cash Rate steady at 4.75% and released a statement that failed to signal a likely tightening of monetary policy next month.  Australian data releases yesterday indicated an on-month 6.5% plunge in job ads, the most in 25 months, and an easing of expected inflation to 3.3% from 3.6% in the previous survey.  Today came news of a slight recovery in the very depressed construction purchasing managers index to 39.6 in May from a reading of 37.9 in April.

Japanese international reserves climbed $3.98 billion in March to $1.140 trillion in May after leaping $19.5 billion in April.  Japan’s index of leading economic indicators faltered to 96.4 in April from 101.1 in March and 104.0 in February.  The coincident index printed at 103.8 after 103.5.

Euroland retail sales rebounded 0.9% in April from a 0.9% drop in March.  The trend was distorted by a late Easter but remains soft overall.  Sales were just 1.1% greater than in April 2010.  On Monday, Eurostat reported a 0.9% increase in producer prices during April.  Euroland’s PPI was already 1.6% above the 1Q11 average level and 6.7% higher than a year earlier.  The Sentix gauge of investor sentiment toward the euro area also got released yesterday, and such showed a further deterioration to 3.48 in June from 10.88 in May, 14.22 in April and 17.07 in March.

German industrial orders advanced 2.8% in April, thanks to a 4.9% jump in demand for capital goods.  Orders had declined 2.7% in March but were 1.5% greater than the 1Q mean in April and also 10.5% higher than in April 2010.  Foreign and domestic orders for capital goods respectively increased by 6.6% and 2.4% in the latest reported month.

Swiss consumer prices edged up 0.1% in May and were only 0.4% higher than a year earlier. 

The Halifax index of British house prices rose by a smaller-than-expected 0.1% in May and were 4.2% lower than a year earlier over the latest three months.  Same-store retail sales in the U.K. fell 2.1% on year in May according to the British Retail Consortium, which also put the drop in total retail sales at 0.3%.

Hungarian industrial production rose 0.5% in April and was 6.9% greater than a year earlier. Finland recorded a EUR 185 million trade deficit in April, 72% smaller than its trade gap in March.  Iceland’s trade deficit narrowed 4% to ISK 6.03 billion in April.

Taiwanese CPI and WPI on-year inflation stood at 1.7% and 3.3% in May.  South African business sentiment settled back under the key 50 level in the second quarter to rest at 48.0.  Filipino consumer price inflation accelerated to 4.5% from 4.3% in April.

Scheduled U.S. data today include weekly chain store sales plus the monthly JOLTS index and consumer credit figures, but these releases will be overshadowed by a key speech late today by Fed Chairman Bernanke, which may shed light on policy after QE2.  Canadian data released yesterday showed a stronger IVEY-PMI reading of 65.5 in May after 57.8 in April and 73.2 in March, as well as a 21.1% plunge in building permits in April that reversed strong gains of 9.8% in February and 16.8% in March.  Poland’s central bank began its interest rate policy meeting today.  A decision will be announced tomorrow.

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

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