Slightly Softer Dollar on Final Trading Day of 2011

December 30, 2011

The dollar depreciated overnight by 0.3% against the yen and both Aussie and New Zealand dollars.  It also eased 0.1% against the Swiss franc and was fixed in China at CNY 6.3009, its softest fixing since the July 21, 2005 revaluation of the yuan.  However, the greenback edged 0.1% higher against the euro and appears headed for a 2011 closing that will be a touch weaker than the key 1.3000 level.

Share prices in the Pacific Rim were mixed.  While equities advanced 1.6% in Malaysia, 1.5% in China, 0.9% in New Zealand and 0.7% in Japan, declines were posted elsewhere of 1.1% in Pakistan, 1.0% in Singapore, 0.6% in India, 0.4% in Australia and 0.1% in South Korea.  In Europe, the German Dax is 0.2% firmer, while the British Ftse has slipped 0.3%.

After a difficult month earlier in December, gold on this final day jumped 2.1% to $1572.70 per ounce, while oil (at $99.95 per barrel) edged up 0.3% and closer to $100 per barrel.  Many forecasters project oil will remain in triple digit territory next year.

The yields on 10-year German bunds and British gilts fell by two basis points each, and the Japanese JGB dipped a basis point to 0.99%.

Purchasing manager survey results for Japan, China, and Russia were published.

  • China’s HSBC-compiled December PMI in manufacturing was revised down to 48.7 from 49.0 reported on December 15.  Such was still better than a score of 47.7 in November.  Orders and production both printed also below 50, connoting declines versus the month before, and the 49.1 average reading in the fourth quarter was the lowest quarterly mean since 1Q09.  More monetary relief is likely in China.
  • Japan’s manufacturing PMI printed at a two-month high of 50.2 after 49.1 in November.  Analysts were expecting a reading of 50.6.  Longer delivery times were a favorable sign.
  • Russia posted a lower PMI score for services of 53.8 after 54.8 in November and in the composite manufacturing and non-manufacturing index of 53.5 versus 54.6 the month before.  Business expectations in the services sector sank to a three-year low.

The only other meaningful data release was the Nationwide gauge of British house prices, which fell 0.2% in December and to a 12-month increase of 1.0% from 1.6% in the year to November.  No U.S. or Canadian data releases are scheduled today.

In other news, Italian producer price inflation slid to 4.2% (3.1% excluding energy) in November.  Dutch PPI inflation of 7.7% was less than October’s 8.3% reading.

Spanish consumer price inflation also eased, printing in December at 2.4% and 2.3% on a harmonized basis.

Greek retail sales volume was 10.8% lower in October than a year before. Portuguese industrial output and retail sales posted on-year declines in November of 2.1% and 9.2%, respectively.

Banks continue to park massive funds safely with the ECB.  Today’s total of EUR 446 billion is the second most ever.

South Korean CPI inflation remained steady at 4.2% this month.  Malaysian PPI inflation slowed to 9.1% in November from 12.0% in the year to October.  Thailand’s trade surplus narrowed 78% to USD 0.2 billion in November, but business sentiment in that Asian economy recovered to 2.3 points to 39.0 in November.

M3 money growth in New Zealand accelerated to 6.5% last month from 5.5% in October, while the expansion rate of Australian M3 slowed to 7.8% from 9.4%.  Credit to Australia’s private sector was up 3.5%.  South African M3 and private credit recorded on-year gains in November of 7.2% and 6.2%, respectively.  Turkey’s trade deficit narrowed slightly to $7.5 billion in November from $7.8 billion in the prior month.

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

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