Dollar Rises Despite Stock Gains

* The dollar rose on Friday, supported by Federal Reserve Chairman Ben Bernanke’s comment last night that the Fed will tighten monetary policy “when the economic outlook improves sufficiently.” This is not a big surprise to the financial markets; however, in conjunction with White House economic adviser Larry Summers’ support for the dollar, it helped the US currency today. Summers said “any idea that nations can devalue their way to prosperity is one that economic experience very much belies.” US stocks rose. The S&P 500 was up 6.01 points to 1,071.49. The euro was pressured by weak German exports. Sterling fell for the week. The Australian dollar consolidated strong weekly gains. The Canadian dollar added to weekly gains as Canada’s employment rose for a second consecutive month and the unemployment rate unexpectedly declined.

* The USD/JPY surged on Friday, reversing most of the week’s earlier losses. The pair is still in a clearly defined downtrend. Strong supports exist at 88 and 87 and there may be a renewed test of those levels. However, we believe the pair is forming a double bottom and we are long the USD/JPY. If the downtrend is broken, the USD/JPY will rally.

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Financial and Economic News and Comments

US & Canada

* The US trade deficit unexpectedly shrank for the first time in four months in August, narrowing 3.6% m/m to $30.71 billion from July’s revised $31.85 billion, figures from the Commerce Department showed. Exports increased 0.2% m/m in August to $128.22 billion, the year’s highest level, from $128.00 billion in July. Imports fell 0.6% m/m to $158.93 billion from July’s $159.85 billion, registering the first fall since May. Exports fell 20.7% y/y in August and imports dropped 28.6% y/y; consequently, the monthly trade deficit was $30.2 billion smaller than last year.

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* Canada’s trade deficit unexpectedly widened to a record C$1.99 billion ($1.91 billion) in August from a revised C$1.32 billion in July, figures from Statistics Canada showed. Exports fell 5.1% m/m to C$29.217 billion in August, while imports declined 2.8% m/m to C$31.202 billion. Exports dropped 31.6% y/y; import decreased 16.7% y/y.

* Canada’s employment rose for a second straight month in September, jumping a much more-than-expected 30,600, after a 27,100 increase in August, according to a separate report from Statistics Canada. The September employment gain was driven by a 92,000 jump in full-time employment, the largest increase since May 2006, while full-time positions declined 61,000. The unemployment rate unexpectedly fell to 8.4% in September from 8.7% in August, registering the first decline since the start of the labor market downturn in fall 2008.

Europe

* Germany’s seasonally adjusted exports unexpectedly fell 1.8% m/m in August, the first fall in four months, after a downwardly revised 1.7% m/m increase in July, while seasonally adjusted imports advanced a slightly morethan- expected 1.1% m/m following July’s upwardly revised 0.1% m/m increase, figures for the Federal Statistical Office showed. The trade surplus narrowed to ?8.1 billion ($11.9 billion) in August from a revised ?14.1 billion in July. The current-account surplus shrank to ?4.6 billion from July’s revised ?11.4 billion.

* Germany’s CPI was down 0.4% m/m in September, final September CPI data from the Federal Statistical Office confirmed, after a 0.2% m/m increase in August. The CPI fell 0.3% y/y, the second year-on-year fall this year. The harmonised index of consumer prices (HICP) for Germany was down a revised 0.5% m/m in September. The HICP decreased a revised 0.5% y/y, a third consecutive year-on-year drop.

* The UK’s deficit on trade in goods and services shrank to £2.3 billion ($3.6 billion) in August from a revised £2.6 billion in July, while the deficit on trade in goods narrowed to £6.2 billion from July’s revised £6.4 billion, the Office for National Statistics reported. Exports declined £0.1 billion and imports fell £0.3 billion. The deficit with EU countries widened to £3.2 billion in August from £2.5 billion in July, while the deficit with non-EU countries shrank to £3.0 billion from July’s £3.9 billion.

* UK PPI output rose a more-than-expected 0.5% m/m in September, a seventh monthly rise, driven by increases in prices of petroleum and other manufactured products, after an upwardly revised 0.3% m/m advance in August, data from the Office for National Statistics showed. September PPI output unexpectedly increased 0.4% y/y, the first annual gain since April, following August’s revised 0.3% y/y decline. Core PPI output climbed 0.5% m/m in September and rose 1.4% y/y, the strongest annual rise since April. PPI input fell 0.5% m/m in September, reflecting a decline in crude oil prices, after a downwardly revised 2.0% m/m increase in August. September PPI input fell 6.5% y/y, following August’s revised 7.7% y/y fall.

Asia-Pacific

* Japan’s private-sector machinery orders, excluding volatile ones, advanced a less-than-expected 0.5% m/m in August after a record decline of 9.3% m/m in July, according to data from the Cabinet Office’s Economic and Social Research Institute. August core machinery orders fell a more-than-expected 26.5% y/y, following July’s 34.8% y/y drop.

* The Bank of Korea, headed by Governor Seongtae Lee, maintained its key interest rate at a record low of 2.00% and signaled it may keep rates on hold. In the October 9 BOK Monetary Policy Committee statement, the central bank said it “will maintain accommodative policy stance for the time being and do what is needed to bring about the continuation of the recent improving pattern of economic movements and financial market stabilization.”

Источник: Hans Nilsson

09.10.2009