Currency Markets Quiet

August 7, 2012

The dollar has edged down 0.1% against the loonie, euro, Swissie, Aussie dollar and yuan.  The greenback is unchanged against the kiwi, 0.3% lower versus sterling and 0.1% firmer relative to the yen.

Share prices rose 1.1% in India and 0.9% in Japan overnight.  Smaller equity gains were posted of 0.6% in New Zealand, 0.4% in Australia and Hong Kong and 0.1% in China, Taiwan and South Korea.  In Europe, the Spanish IBEX (+0.8%) has been today’s best performer, helped by some supportive remarks from German Chancellor Merkel.  The German Dax and Paris Cac are up 0.3% and 0.4%, but the British Ftse is off 0.2%, depressed by a sharp plunge in Standard Charter Bank on worries it may lose its license to operate in the New York market.

Oil and gold prices are 0.3% and 0.2% higher at $92.46 per barrel and $1618.70 per ounce.

10-year yields on Japanese JGBs, British gilts, and German bunds have risen by three, three and two basis points today.

The Reserve Bank of Australia left its Official Cash Rate unchanged at 3.5% for a second straight month.  Four cuts totaling 125 basis points were administered between November and June, and RBA officials need time to assess the impact of those relaxations of monetary policy.  For now, the stance is deemed “appropriate.”

Sri Lanka’s central bank also left its main interest rates unchanged.  Like the case of Australia, the decision was expected by analysts.

Japanese international reserves increased $2.23 billion last month following drops of $7.169 billion in June and $11.826 billion in May.

New Zealand labor costs including overtime pay rose 0.4% between 1Q12 and 2Q12 and by 2.0% in year-on-year terms.  Full-time employment rose 1.5% on year, while part-time workers slipped 0.5%.

Senior officials in the Assad government of Syria continue to defect, including Prime Minister Hijab.

German industrial orders slumped 1.7% on month in June and by 7.8% on year.  Orders still rose 0.6% sequentially in the second quarter, but June’s level was already 0.9% lower than the 2Q average, indicating adverse momentum heading into the summer months.  Domestic orders for capital goods, a leading indicator of future business investment, posted back-to-back monthly drops of 2.1% in May and 1.6% in June.

In Switzerland, where monetary officials continue to fight deflation, consumer prices fell 0.5% on month and 0.7% on year in July.  The seasonally adjusted Swiss jobless rate held steady in July at 2.9%.

British industrial production and factory output posted June-over-May declines of 2.5% and 2.9%, depressed by an extra bank holiday and the Queen’s 60th Jubilee holiday.  The monthly declines were actually somewhat less than anticipated but left industrial production and manufacturing output both 4.3% below their June 2011 levels.  Same-store sales in the U.K. were just 0.1% higher than a year before in July, marking a three-month low.  Total store sales went up 2.0% according to British Retail Consortium figures.

Italian real GDP fell 0.7% sequentially in the second quarter and by 2.5% from a year earlier.  Such was the fourth consecutive quarterly decline and the largest on-year drop in ten quarters.

A number of European countries besides Britain also reported industrial productionItalian output fell 1.4% in June and by 8.2% from a year before.  Dutch output dropped 0.6% in June, the first decrease in four months, and by 2.4% in on-year terms.  Output in Hungary slumped 2.2% on month and rose 0.6% on year.  In Norway, industrial production rose 0.6% in June and by 7.7% from June 2011.  Irish industrial output climbed 3.3% in June and was 10.5% greater than a year earlier.

Finland’s trade balance swung from a tiny May deficit to a surplus of EUR 55 million in June.  Iceland reported favorable trade surpluses of ISK 4.387 billion in June and ISK 31.246 billion in the first half of 2012.  These were nonetheless smaller than year-earlier surpluses of ISK 8.765 billion in June 2011 and ISK 48.392 billion in 1H11.

Today is a light day for U.S. data, just weekly chain store sales and monthly reports on job openings and layoffs and on consumer credit.  Fed Chairman Bernanke gives a speech but not on the topic of monetary policy.  Canada will be releasing the IVEY-purchasing managers index and building permits, while in the U.K. the National Institute of Economic and Social Research is set to report its latest estimate of monthly GDP.

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

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