Softer Kiwi and Dollar

May 8, 2013

In testimony, Governor Wheeler of the Reserve Bank of New Zealand disclosed that the central bank had conducted currency intervention recently to counter a significantly overvalued exchange rate.  It’s been some five years since the bank last intervened.  The kiwi has slipped 0.4% in response against its U.S. counterpart.

The U.S. dollar otherwise has lost 0.7% against the euro, 0.5% versus the Swiss franc, 0.2% relative to the yen and sterling, and 0.1% against the yuan and Australian dollar.  The loonie is down 0.1%.

Some markets like France are partially shut for VE Day commemorating the 68th anniversary of the end of World War II.

Share prices rose 0.7% in Japan, 1.3% in Taiwan,1.1% in Australia, 0.9% in Hong Kong and Indonesia, and 0.5% in China, India and the Philippines.  European equities are moderately firmer.  U.S. stocks opened marginally lower.

The British 10-year gilt yield dipped a basis point, while German bunds and Japanese JGBs are unchanged.

Gold rebounded 1.3% to $1466.90 per ounce.  WTI oil edged up 0.2% to $95.85 per barrel.

The National Bank of Poland surprised a majority of analysts with another 25-basis point cut of its 7-day repo rate to 3.0%.  Officials had not reduced the rate in April, implying instead no remaining scope for doing so.  Today’s was the sixth cut since November, totaling 175 basis points and was made against the backdrop of sub-target inflation, sub-1% growth, and criticism from the government.

The key policy interest rate of Norway’s central bank was kept at 1.5%, its level since a 25-basis point cut in March 2012.  Officials do not expect the onset of rate normalization until the second quarter of next year.

China reported a larger-than-forecast $18.16 billion merchandise trade surplus for April.  Trade had registered a rare $884 million deficit in March following surpluses of $15.25 billion in February and $29.15 billion in January.  In April, there was an acceleration of on-year export and import growth to 14.7% and 16.8%. 

German industrial production fell 0.7% in March in spite of a 4.0% monthly advance in energy output.  Construction contracted 3.1% on top of a 1.6% decline in February.  Industrial production was 2.5% lower than in March 2012 and posted a 0.2% average increase between the final quarter of 2012 and the first quarter of 2013.  Production of capital goods rose by 2.7% in February and another 2.1% in March.

The Halifax index of British house prices increased 1.1% in April and exceeded the year-earlier level by 2.0% in February-April, the highest on-year gain since September 2010.

Switzerland continues to battle deflation.  Consumer prices were unchanged on month and down 0.6% from a year earlier in April. 

A number of other countries had March industrial output reported.  Dutch industrial production fell 2.0% on month and 5.3% on year.  Turkish industrial output dropped 0.9% on month and rose 1.4% on year.  In Norway, there was a monthly decline of 0.7% and a 12-month 3.2% increase. 

Finland’s trade deficit tripled from the month before to EUR 225 million in March.  Denmark recorded a DKK 1.3 billion current account deficit in March and a trade surplus of DKK 4.4 billion.

Canadian housing starts fell 3.4% last month.  U.S. mortgage applications rose 7% in the week of May 3, as the 30-year fixed-rate mortgage rate dipped a basis point to 3.59%.

Copyright 2013, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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