Greenback Falls on Better Global Economic Outlook

* The dollar fell on Thursday as risk sentiment improved. The International Monetary Fund increased its forecast for World economic growth. Former Federal Reserve chairman Paul Volcker said the global economic slump is easing, most clearly in the US and the UK. US initial jobless claims fell to the lowest level since January. Treasuries rose following a successful 30-year auction. The S&P 500 increased 5.74 points to 944.89. The yen rose modestly. The euro was above 1.41. Sterling gained on economic recovery optimism. Higher-thanexpected fixed-asset investment in China supported commodity prices. The Canadian dollar was supported by rising energy prices despite lower-than-expected Canadian capacity utilization. The Australian dollar rose on the improving global economic outlook and less-than-expected Australian job losses.

* The USD/CHF fell on Thursday, having been falling steadily since April. The Swiss National Bank began intervening to lower the Swiss franc’s value on March 12, in its first solo intervention in foreign-exchange markets since 1992. The SNB stated that it will “resolutely” prevent the franc appreciation as long as deflation risks persist. There are support in the 1.06 area and resistance from the downtrend in the 1.08 area. If the downtrend is broken, the pair will rise to the 1.10 area.

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Financial and Economic News and Comments

US & Canada

* US retail sales increased 0.5% m/m in May, as forecast and the first gain in three months, driven by higher gas prices and auto sales, following upward revisions for April’s 0.2% m/m decline and March’s 1.2% m/m decrease, figures from the Commerce Department showed. Retail sales excluding autos increased a morethan- expected 0.5% m/m in May after an upwardly revised 0.2% m/m decline in April. May retail sales fell 11.1% y/y and fell 8.5% y/y excluding autos.

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* US initial jobless claims in the week ending June 6 fell a more-than-expected 24,000 to 601,000, after the previous week’s upward revision to 625,000, figures from the Labor Department showed, suggesting employment losses are moderating. The 4-week average of new jobless claims declined 10,500 to 621,750, the lowest level since mid-February. Continuing claims in the week ending May 30 rose 59,000 to 6,816,000, following the preceding week’s upward revision to 6,757,000. The insured unemployment rate was at a 26- year-high 5.1% for the week ending May 30, unchanged from the prior week’s upwardly revised 5.1%.

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* US business inventories fell for an eighth consecutive month in April, falling a slightly more-than-expected 1.1% m/m to a seasonally adjusted $1.385 trillion, after March’s downwardly revised 1.3% m/m decline, according to Commerce Department data, signaling US businesses made some progress lowering their stockpiles. Business sales were down 0.3% m/m in April to $966.8 billion, following March’s downwardly revised 1.8% m/m drop. The inventory-to-sales ratio declined to 1.43 from March’s 1.44. Inventories decreased 6.6% y/y in April; sales dropped 17.3% y/y.

* US household net worth at the end of Q1 2009 was an estimated $50.4 trillion, the lowest level since 2004, $1.3 trillion less than at the end of 2008, according to the Federal Reserve’s Flow of Funds Accounts of the United States report.

* Canada’s Q1 2009 capacity utilization rate posted a seventh consecutive quarterly decline, falling more than expected to 69.3%, the lowest since records began in 1987, following Q4 2008’s upwardly revised 74.9%, data from Statistics Canada showed.

Europe

* According to the June 2009 Eurosystem staff macroeconomic projections published in the European Central Bank June 2009 Monthly Bulletin, “euro area annual real GDP growth will range between -5.1% and -4.1% in 2009 and between -1.0% and 0.4% in 2010” and “euro area annual HICP inflation is seen to range between 0.1% and 0.5% in 2009 and between 0.6% and 1.4% in 2010.” Regarding unemployment, “further gradual increases in the euro area unemployment rate can be expected in the months ahead,” according to the bulletin.

Asia-Pacific

* Japan’s Q1 2009 GDP declined 3.8% q/q, less than the government initially reported 4.0% q/q contraction, final Q1 GDP data from the Cabinet Office showed. Annualized GDP contracted a record 14.2% in Q1, less than the previously reported 15.2%, following Q4 2008’s revised 13.5% contraction.

* According to the June inflationary expectations survey by the Melbourne University’s Institute of Applied Economic and Social Research, Australian consumers expect consumer-price inflation to climb 2.8% over the next 12 months, up from 2.3% in the May survey.

* Australia’s employment declined a fewer-than-expected 1,700 in May after rising a downwardly revised 25,400 in April, data from the Australian Bureau of Statistics showed. The May unemployment rate rose to 5.7%, as forecast, from April’s upwardly revised 5.5%. The participation rate increased to 65.5% from 65.4%.

* China’s urban fixed-asset investment rose by the most in five years, rising 32.9% y/y in the five months to the end of May, the Statistics Bureau said. Exports fell 26.4% y/y in May, the deepest decline since records began in 1995, the Customs Bureau said.

Источник: Hans Nilsson

11.06.2009