Central Banks in the News

June 9, 2011

The kiwi advanced 1.1% against the dollar following an upbeat statement from the Reserve Bank of New Zealand, which left its Official Cash Rate at 2.5% but spoke about an improved economic outlook.

The Swiss franc is relatively weak, dropping 0.5% against the dollar, which otherwise fell 0.1% against the euro and sterling.  The dollar rose 0.4% against the Aussie dollar, helped by lackluster Australian labor market data, and 0.2% relative to the yen.  The Canadian dollar and yuan are steady.  The IMF urged Chinese officials to quicken the pace of yuan appreciation.

Stocks dropped 1.9% in China, 1.0% in New Zealand, 0.7% in the Philippines, 0.6% in South Korea, and 0.5% in Indonesia.  In Europe where investors await ECB President Trichet’s press conference, the German Dax has edged 0.2% higher, and the Paris Cac and British Ftse are up 0.1%.

The 10-year Japanese JGB yield slid two basis points to 1.14%.  The 10-year gilt firmed a basis point to 3.28%.

Oil prices firmed another 0.2% to $100.91 in continuing reaction to yesterday’s failure by OPEC to agree on production increases. Gold eased 0.2% to $1535.30 per ounce.

The Brazilian Selic Rate was raised 25 basis points to 12.25% as was expected.  Such is now 350 basis points above its January-September 2009 trough.

The Bank of England left its policy settings unchanged as expected.  Minutes of this week’s meeting will be published June 22. 

Bank Indonesia left its reference rate steady at 6.75%.

Most analysts expect the ECB to signal a likely rate hike in July.  Upward revisions to growth and inflation forecasts seem probable.

Japanese first-quarter GDP growth was revised only slightly to negative 3.5% at an annualized rate from minus 3.7% reported on May 19.  On-year growth remained at minus 1.0%.  This was the second negative quarter in a row, as GDP dropped 2.9% in 4Q10.  The GDP price deflator was 1.9% below its year earlier level and 4.6% lower than its level in 1Q09.

Japanese consumer confidence rose to 34.8 in May, still well below the 50 break-even line, from 33.4 in April and an average 1Q score of 40.0.

Japanese machine tool orders were 34.2% higher in May than a year earlier.

A 7.8K increase in Australian jobs in May after a near 26K drop in April was less than a third as much as expected.  Full-time employment slumped 22.0K last month after tumbling by 57.2K in April.  The participation rate of 65.6% and unemployment rate of 4.9% failed to improve.

Malaysian industrial production fell 7.6% in April and by 2.2% on year, undershooting analyst forecasts.

The Bank of France’s business sentiment index unexpectedly dropped to 103 in May from 107 in April and 110 in March.

Greek first-quarter GDP growth got revised to just 0.2% on quarter and minus 5.5% on year from preliminary estimates of a quarterly 0.8% increase and an on-year drop of 4.8%.  Danish industrial production increased 3.0% on month and 4.5% on year in April, and its trade surplus narrowed by DKK 1.1 billion to DKK 7.2 billion.

Britain’s goods and services trade deficit was barely changed at GBP 2.762 billion in April after GBP 2.793 billion in March.  The services surplus contracted by GBP 288 million, and the merchandise trade deficit narrowed GBP 319 million to GBP 7.389 billion.  Goods imports fell by 0.9% on month, a sign of ebbing domestic demand.

Dutch industrial production fell 0.3% in April.  CPI inflation in The Netherlands accelerated to 2.3% last month from 2.1% in April.

Portuguese GDP, like Japanese GDP, posted a second sequential quarterly drop, falling 0.6% in 1Q11 and rising just 0.6% on year.  CPI inflation slowed in Portugal to 3.8% in May from 4.1% in April.  Greek CPI inflation slowed to 3.3% from 3.9% in April.  Irish CPI inflation also decelerated, rising 2.7% in the year to May after a 12-month advance of 3.2% in April.

Czech GDP grew 0.9% in 1Q, 50% faster than the initial report of 0.6%.  Czech CPI inflation picked up to 2.0% in May from 1.6% the month before.  On-year Hungarian growth of 2.5% in 1Q11 was the highest in 17 quarters. Hungary’s trade surplus narrowed  43% on month in April to EUR 479 million. Romania’s trade deficit widened slightly to EUR 897 million in the same month. 

Canada and the United States release trade figures today.  The U.S. also reports weekly jobless insurance claims and wholesale inventories, while Canada releases home prices.  The big event will be the ECB press conference.  President Trichet’s 8-year term ends in October.  He will most likely be succeeded by Mario Draghi.  Yellen of the Fed and Mersch of the ECB speak today.

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

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