Euro and European Stocks Strengthened Overnight

April 11, 2012

The U.S. dollar has relinquished 0.6% against the euro, sterling and Swiss franc.  The Greenback also lost 0.7% against the kiwi, 0.5% versus the Aussie dollar and 0.1% relative to the yen and yuan.

After touching 2-month lows Tuesday, the German Dax and Paris Cac have traded 1.2% higher, while the British Ftse is up 0.5%.  Asian stocks mostly fell in reaction to Tuesday’s difficult North American session.  Japan’s Nikkei dropped another 0.8% is is below 9500.  Share prices fell by 1.2% in Singapore, 1.1% in Hong Kong and Australia, and 1.0% in Thailand.

Sovereign debt yields rose additionally in Spain and Italy, whereas Germany’s 10-year bund auction delivered a record low yield.  The ten-year JGB yield dipped another basis point to 0.95%, while the 10-year British gilt yield firmed four basis points.  The 10-year Treasury fell below 2.0% on Tuesday, but futures trading suggest a 2-handle at today’s open.

Oil prices firmed 0.5% to $101.49 per barrel. Gold eased 0.3% to $1656.20 per ounce.

Rick Santorum dropped out of the Republican presidential nomination race, assuring an Obama – Romney face-off in November.

An 8.7 magnitude earthquake in Indonesia has led to tsunami warnings for Sumatra.

The State Bank of Vietnam cut its key refinancing rate to 12.0% from 13.0%.  This was the second 100-basis point easing since March 12.

Japanese machinery orders in February performed considerably more strongly than forecast, leading officials to bump their assessment up to a “mildly rising trend.”  Core private domestic orders had been projected to fall 1.0% but instead rose by 4.8%.  Such were 8.9% greater than in February 2011, and domestic core orders over the first two months of 2012 exceeded the 4Q11 average level by 5.3%.  Foreign machinery orders dropped 18.3%, nearly offsetting January’s 20.1% advance.

Japanese on-year bank lending growth accelerated to 0.6% last quarter from 0.2% in 4Q11.  The gain in lending excluding trusts was 0.8% in the first quarter after 0.3% in the final quarter of 2011.  The Bank of Japan released a mostly unchanged assessment of the economy.  Japan’s finance minister engaged in some verbal protests against renewed yen strength.  The yen has an 80 handle against the dollar.

Consumer confidence in Australia declined to an 8-month low, falling 1.6% between March and April.  Australian mortgage loans fell by 2.5% in February to a one-year low, while business investment lending increased 4.4% after falling sharply in January.

Business confidence in New Zealand improved to a reading of +13 last quarter from zero in the final quarter of 2011.

The Asian Development Bank cut projected Chinese GDP growth in 2012 to 8.5%.

Factory output in South Africa climbed 2.8% in February and posted an on-year advance of 4.1% after rising 2.3% in the year to January.

According to the British Retail Consortium, same store sales were 1.3% higher in March than a year earlier, and total store sales recorded an increase of 3.6%, the most since December.

German wholesale prices jumped another 0.9% in March, as oil product prices went up 2.3%.  The WPI had risen 1.2% in January and by 1.0% in February.  WPI inflation from a year earlier was only 2.2%, however, down from 2.6% in February, 3.0% in December and January, and 10.9% in March 2011.

Spanish industrial production adjusted for the number of working days posted a deeper 5.1% on-year plunge in February after falling by 4.3% between January 2011 and January 2012.  Danish industrial production was unchanged in February from January but 5.2% higher than a year before. Norwegian industrial output rose 3.1% between February 2011 and February 2012. 

Irish housing continues to suffer.  The Irish construction purchasing managers index remained below the 50 no change line in March but registered a 3-month high of 46.7 after a 45.8 reading in February.  The index averaged 46.4 last quarter, 1.2 points lower than the 47.6 mean in the final quarter of 2011.

The French presidential campaign is in full swing.  Round one of the election is scheduled for April 22.  The center-right incumbent, Sarkozy, says French sovereign debt yields will shoot higher if a Socialist wins.

Hungarian CPI inflation eased to 5.5% in March from 5.9% in February.

Scheduled U.S. data today include import prices, the Fed’s Beige Book of regional conditions, the federal budget, and weekly oil inventories.  A bunch of Fed officials have public speaking engagements: Rosengren, Lockhart, Bullard, George, and Yellen.

Copyright 2012, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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