Spotlight on ECB

July 7, 2011

Markets are largely marking time ahead of the ECB and Bank of England rate decisions.  The euro fell following Moody’s downgrade of Portuguese debt to junk status but is unchanged against the dollar overnight.  The U.S. currency has risen 0.3% against the Swiss franc and 0.1% relative to the yen and sterling.  The greenback is off 0.5% against the Australian dollar following better-than-forecast Aussie jobs numbers.  The dollar also lost 0.3% against the kiwi and 0.1% versus the yuan and Canadian dollar overnight.

Oil continues to creep back higher, firming 0.6% to $97.27 per barrel and regaining 7.4% since June 27.  Gold edged 0.2% lower to $1526.80 per ounce.

Stocks rose 1.9% in India, 1.0% in Thailand, 0.8% in Indonesia and 0.4% in South Korea.  Equities were unchanged today in New Zealand and Australia but dropped 0.6% in Taiwan and Pakistan, 0.4% in China and 0.1% in Malaysia and Japan.  In Europe, the German Dax and British Ftse firmed 0.4%, while the Paris Cac is 0.5% stronger.

Core domestic Japanese machinery orders rose 3.0% in May after dropping 3.3% in April.  Foreign machinery orders fell 6.6% following a 2.1% drop in April.  Stock and bond transactions in the week to July 2 generated a JPY 398 billion capital inflow following a 594 billion yen net inflow in the week of June 25.

German industrial production advanced 1.2% in May after dropping 0.5% in April.  The 12-month increase of 7.6% was down from 9.6% in the year to April but larger than analysts had forecast. 

Australian jobs increased 23.4K in June, more than 50% greater than expected.  The jobless rate stayed at 4.9%.  Australia’s construction PMI index remained weak in June with a reading of 35.8, down from 39.6.

New Zealand’s release of GDP figures, which were due today, will instead be released a week from today.

Many analysts were surprised that Bank Negara Malaysia did not tighten Malaysian monetary policy further, preferring instead to keep its overnight policy rate at 3.0%.  Such had been hiked at the prior May 5 meeting by 25 basis points, and three increases of that size were implemented during 2010.

British industrial production recovered 0.9% in May after a 1.7% drop in April but remained 0.8% lower than a year earlier.  Output in the three months to May sank 1.5% after rising 0.5% during the prior three-month period.  Manufacturing output went up 1.8% on month and 2.8% on year.

The French trade deficit widened 3.5% to EUR 7.4 billion in May.  The Czech trade surplus increased 13% to CZK 14.4 billion in May. 

Norwegian industrial output fell by 2.7% on month and 12.4% on year in May.  Hungarian industrial production fell 0.8% on month but rose 7.6% on year in May.

Swiss consumer prices slid 0.2% in June and posted a 12-month advance of just 0.6%. Dutch consumer prices slid 0.5% in June and retained an on-year pace of 2.3%.  Greek consumer prices fell 0.2% in June with an unchanged 12-month 3.3% rate of increase.

Scheduled U.S. data releases today feature the ADP estimate of private employment, the monthly budget, consumer credit, and weekly jobless insurance claims.  Canada reports the IVEY-PMI survey, house prices, and housing starts.

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

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