Spotlight on Central Banks and Obama

September 8, 2011

The dollar is 0.6% higher against the Swiss franc, which is trading at 1.2141 per euro.  Swiss National Bank officials intend to unilaterally prevent the franc from strengthening past 1.2000/EUR. 

The dollar has risen 0.3% against the euro and 0.1% versus the Australian dollar but is 0.6% weaker against the kiwi and down 0.2% relative to the loonie and 0.1% against the yen and sterling.

Following jumps Wednesday of 3.0% in the Nasdaq, 2.9% in the S&P 500 and 2.5% in the DOW, equities today closed mixed in the Pacific Rim with drops of 0.8% in China and 0.7% in Hong Kong but advances of 0.3% in Japan, 0.9% in Singapore, 0.6% in India and 0.1% in Australia (where poor labor statistics were reported).  In Europe, the German Dax and British Ftse have so far gained 0.8%, and the Paris Cac is 0.9% stronger.

The yields on 10-year German bunds and British gilts slid by three and four basis points, whereas the JGB edged a basis point higher.

Gold strengthened 1.0% to $1836.50 per ounce, while oil softened 0.4% to $89.00 per barrel.

Obama’s speech on stimulating jobs is slated for 19:00 EDT.  Expectations on its content are low.  The size of the plan has been mooted at $300 billion.

The Bank of England as expected left its Bank Rate at 0.5% and did not change the GBP 200 billion ceiling on its asset purchase program.

The Filipino central bank kept existing monetary policy settings unchanged as expected.

The Bank of Korea’s benchmark interest rate of 3.25% wasn’t changed, either, but the policy vote failed to be unanimous.

Bank Indonesia kept its key reference interest rate steady at 6.75%.

On Wednesday, the Polish Narodowy Bank held its 7-day repo rate at 4.5%, the Bank of Canada retained a 1.0% benchmark overnight interest rate target, the Swedish Riksbank left its key rate at 2.0%, and the Bank of Japan offered no fresh stimulus after having done so at the previous policy meeting.

Today’s big central bank event will be the ECB press conference at 12:30 GMT and whether the seed is perhaps planted for a possible rate cut in coming months.  The ECB as expected did not change its short-term interest rate structure, including the 1.50% refinancing rate.

Chairman Bernanke has a public speaking engagement.

Australia’s jobless rate increased from 5.1% in July to a 10-month high of 5.3% in August.  A 9.7K drop in employment was 20K worse than the expected result.

The Bank of France cut its projected 3Q GDP growth rate in half to a mere 0.1% after reporting unchanged business sentiment in industry but a point-drop in the service sector sentiment index to 97.  The French trade deficit widened 19.4% to EUR 6.46 billion in July from EUR 5.41 billion in June.

Germany’s current account surplus of EUR 7.5 billion in July was less than June’s EUR 11.5 billion or July 2010’s EUR 10.4 billion surplus.  A 1.8% on-month drop in exports had not been expected.  The seasonally adjusted EUR 10.2 billion surplus compares to monthly averages of EUR 12.1 billion in 2Q, EUR 12.7 billion in 1Q, and EUR 13.5 billion in the second half of 2010.

Japan’s current account surplus in July of JPY 990 billion was 42.4% smaller than a year earlier.  Exports fell 2.3% on year, while imports went up 13.6%.  The seasonally adjusted current account surplus of JPY 753 billion was 18.4% smaller than June’s surplus.  The customs clearance trade deficit in the first twenty days of August equaled JPY 523 billion, almost double the JPY 272 billion deficit a year earlier. 

Japanese stock and bond transactions in August generated a JPY 1.45 trillion outflow.

Japan’s economy watchers index suffered a setback in August, swinging below 50 to 47.3 from 52.6 in July.  Fitch indicated that a further downgrade of Japan’s credit rating is likely.

Japanese core domestic machinery orders fell 8.2% in July, twice as rapidly as forecast.  Foreign machinery orders sank 9.8%.  These results are tracking well below official expectations.  Last month, they predicted a 0.9% rise in domestic core orders and a 4.8% drop in foreign machinery orders during the third quarter.

Japanese bank lending in August was 0.5% lower than a year earlier.

Thai consumer confidence fell by 0.6 points to 73.8 in August.  Malaysia’s trade surplus widened 24% on month in July. 

Dutch industrial output in July rose 0.2% on month and 3.0% on year. Romanian Industrial production rebounded 1.2% in July and exceeded July 2010’s level by 5%.

Dutch CPI inflation held at 2.6% last month. Irish CPI inflation slowed to 2.2% from 2.7% in July.  Spanish July industrial production fell 2.8% on year after adjusting for variations in the number of working days.

Portuguese GDP was flat in 2Q after dropping 0.6% in the first quarter.  GDP was also 0.9% lower than in 2Q10.

Greek GDP in the second quarter was 7.3% below its year-earlier level.  Analysts had expected a 6.9% on-year decline.

Icelandic GDP slumped 2.8% last quarter, cutting on-year growth to just 1.4%.  Hungarian GDP growth last quarter was confirmed at zero versus 1Q and 1.5% against a year earlier.  Czech GDP edged up 0.1% in 2Q and was 2.2% higher than a year before.

The U.S. and Canada release trade data.  Canada also reports home prices and housing permits.  U.S. jobless insurance claims, energy inventories, and consumer credit will also draw attention.

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

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