Steady Dollar

June 27, 2012

The dollar is unchanged from Tuesday’s closing levels against the euro and Swiss franc, up 0.1% relative to the yen, loonie and sterling, and 0.1% lower versus the yuan and Australian and New Zealand dollars.

The 10-year German bund is five basis points higher after Egan-Jones downgraded German credit to a rating of A+ from AA-.  The 10-year British gilt and Japanese JGB yields are respectively up one basis point and down a basis point. 

The Italian government auctioned EUR 9 billion of 6-month paper with a yield of 2.96%, up from 2.10%, and a bid:cover ratio of 1.62.  Italian

In the Pacific Rim, share prices rose 0.8% in Japan, 1.4% in Indonesia, 1.3% in Singapore, 1.0% in Hong Kong, 1.2% in the Philippines, 0.7% in Australia, and 0.6% in Taiwan, but Chinese equities slid by 0.3%.  In Europe, the British Ftse, Paris Cac, Spanish IBEX and German Dax are respectively 0.4%, 0.3%, 0.2% and 0.1% firmer.

Gold and oil prices are down 0.4% and 0.2% at $1568.40 per ounce and $79.18 per barrel.

Italian business sentiment surprisingly rebounded to a reading of 86.8 in June.  May’s score was revised down 2.0 points to 84.2 (lowest since 2009), and the April reading was cut to 86.8 from 89.1 reported earlier.

In all five states that have reported German CPI data for June, on-year inflation eased.  June-over-May changes were either flat or down 0.1%.  12-month consumer price increases ranged from just 1.3% in North Rhine Westphalia (Germany’s most populous state) to 2.2%, the next largest state. Core inflation is a tad less than headline inflation.  The ECB targets inflation for the whole eurozone at “below but close to 2.0%.”

German import prices fell 0.7% in May and to a 12-month increase of 2.2% from 2.3% in April, 3.1% in March and 7.5% in July 2011.  Imported energy prices plunged 3.7% on month.  Excluding mineral fuels, the import price index was 1.4% higher than a year earlier.  Export prices eased 0.1% last month and to an on-year increase of 1.6% from 1.8% in the year to April.

Mixed U.K. data were released.  The CBI’s monthly survey of distributors produced an unexpected sharp improvement, with a reading of 42%, twice as high as the 21% score in May and 48 points better than in April.  Analysts were expecting moderate deterioration in the June reading.  According to the British Bankers Association, mortgage approvals fell to just 30,238 in number, less than the 33K expectation and respectively 5.8% less than in April and 3.4% less than a year before.

Romania’s central bank left its key policy interest rate at 5.25%, matching street expectations.  The last change, a cut of 25 basis points, was implemented in March.

Retail sales in Spain were 4.9% lower in May than a year before.  That’s a smaller drop than in the year to April and also less than predicted. Finnish consumer confidence fell to a reading of 5.8 in June from 11.4 in May and 10.4 in April.  Icelandic consumer price inflation in June matched May’s 12-month increase of 5.4%, highest so far in 2012.  Analysts were anticipating some improvement instead.  Norwegian unemployment averaged 3.0% in the three months to May.

New Zealand recorded a NZD 301 million trade surplus in May, down from NZD 550 million a year earlier.  A deficit of NZD 805 million accrued over the last twelve reported months.

Utah Senator Orrin Hatch defeated a Tea Party challenge in the Republican primary yesterday.

U.S. data releases today include durable goods orders, pending home sales, and weekly oil inventories and mortgage applications.

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

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