Dollar Down ahead of Bernanke’s Jackson Hole Speech

August 31, 2012

The dollar has declined by 0.8% against the euro, which hit an 8-week high of $1.2629.  The dollar also has fallen 0.8% against the Swiss franc, as well as 0.6% versus the loonie, 0.5% relative to sterling, 0.4% against the Aussie and New Zealand dollars, and even 0.3% against the yen.

Investors hope to hear a hint of stimulus from Fed Chairman Bernanke, who speaks today at the Jackson Hole Symposium.

The Spanish IBEX, German Dax, and Paris Cac are up 1.7%, 1.2% and 1.0%.  Japan’s Nikkei closed 1.6% lower, however.  Stocks fell 0.9% in India but rose 1.0% in New Zealand. 

Press reports surfaced that Bundesbank Pdt Weidmann had considered resignation to protest ECB plans to buy national sovereign debt.

Yields on 10-year German bunds and British gilts have risen by seven and four basis points.

Oil prices are 1.7% higher at $96,27 per barrel, and gold has firmed 0.4% to $1664.30 per ounce.

Being the last day of the month, a considerable body of data were released.

Japanese consumer prices (headline and core) were unchanged in seasonally adjusted terms between June and July.  In on-year terms, the total CPI fell by 0.4%, while the core and core-core measures fell by 0.3% and 0.6%. 

Japan’s jobless rate held steady at 4.3% in July.  Real household spending sank 1.3% on month for a second straight time but rose 1.7% on year.  Housing starts were 9.6% lower than in July 2011, while construction orders posted an on-year advance of 8.0% in July.

Japan’s manufacturing purchasing managers index dipped another 0.2 points to a sub-50 reading of 47.7, the weakest reading since April of last year.

Japan’s most depressing data release was industrial production.  Instead of rising 1.0% as analysts were predicting, such slumped 1.2% in July.  Officials expect just a 0.1% uptick in August followed by a 3.5% plunge in September, and they continue to characterize the trend as “flat.”

Australian private-sector credit grew 0.2% on month and 4.2% on year in July, which met expectations.  New Zealand M3 money growth accelerated to 7.2% in July from 5.7% in June.

South Korean industrial production fell 1.6% in July, cutting the 12-month increase to just 0.3%.

There was a big earthquake overnight in the Philippines.

Indian GDP grew 5.5% between 2Q11 and 2Q12, a bit faster than analysts predicted but nonetheless disappointing.

Euro area CPI inflation accelerated more than assumed to 2.6% in August from 2.4% in July. 

Euro area unemployment held steady at a record 11.3% in July, up from 10.1% a year earlier.

German retail sales fell 0.9% in July instead of ticking marginally higher as predicted.  Sales were 1.0% lower than a year earlier.

Britain’s Nationwide house price index rose 1.3% on month during August, a much better result than forecast which trimmed the 12-month rate of decline to 0.7% from a drop of 2.6% in the year to July.

Norwegian retail sales volume rose 2.6% on year in July, less than the 4.4% increase over the first seven months of 2012.

Greek retail sales in June were 10.6% weaker than a year earlier.

Canadian real GDP increased 0.5% (1.8% annualized) for a third straight quarter and was 2.5% above the level in 2Q11.  Personal consumption grew 2.8% annualized, and inventories and business investment also lent support to the economy.  Net exports and government spending exerted some drag, however.  The personal consumption price deflator posted a smaller 1.4% on-year increase.  The GDP monthly index, calculated from the supply side, firmed by 0.2% in June and was 2.4% greater than a year before.  Canadian industrial production increased 0.3% in June and 3.7% from a year earlier.

Brazilian GDP rose just 0.4% on quarter and 0.5% on year during the second quarter of this year.

The Chicago purchasing managers index slid a tad more than expected, printing at 53.0 in August after a 53.7 reading in July.

According to the U. Michigan index, U.S. consumer confidence rebounded more than assumed this month.  The August reading was revised upward to 74.3 from a 73.6 score measured earlier in the month and a reading in July of 73.2.  The improvement contrasts with deterioration reflected in the Conference Board index.  U.S. auto sales data will arrive later.

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

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