United States
The US dollar during last week witnessed an erratic performance against the major currencies; diverse economic and equity news contributed in a US dollar seesawing between wide ranges during single sessions. The Sterling pound range-traded between a low of 1.6276 and a high of 1.6600 before closing the week at 1.6508, a flat performance for the week. On the other hand, the Euro started the week at 1.4200, slumped to a low of 1.4046 before recovering back during the week and closing at 1.4326 on Friday after positive PMI figures showing improving economic and business activity for the Eurozone. The yen strengthened to a low of 93.43 and closed the week at 94.38. This is the second consecutive weekly gain for the yen against the dollar, partly as China was said to be planning to tighten capital requirements for banks, initiating losses in stocks and boosting demand for the yen as a refuge.
Housing Sector Stabilizing
Housing Starts in July are up from their lows at the start of 2009 but down 1% compared to the June’s level. The July’s figure of 581,000 came below the expected annual seasonally adjusted number of 600,000 units started. The number of building permits granted dropped slightly to 560,000 in July on an annualized basis. On the other hand, mortgage delinquencies came at 9.24% in the second quarter of 2009. Finally, Existing Home Sales for July came at 5.24 million units, up 7.2% compared to the prior figure of 3.6% and the forecast of 2.1%.
Producer Prices Still Dropping
Producer prices were below expectation in July; on a year-on-year basis, the Producer Price Index (PPI) dropped by 6.8% (versus expectations of a drop of 5.9%) while the PPI excluding the volatile prices of food and energy were up by 2.6%.
Europe
German Investor Confidence at a 3-Year High
German investor confidence measured by the ZEW survey jumped to 56.1, the highest level in more than 3 years after government stimulus and rising exports. The previous month’s figure was at 39.5 while the expectations were towards a modest gain of 45. In parallel, the survey measuring the economic sentiment for the Eurozone also surged to 54.9 from the July’s level of 39.5. Both indicators were positively perceived and markets reacted immediately when the figures were released on Thursday; equity markets around the world rebounded from previous daily losses.
Eurozone PMIs indicating growth
The Purchasing Managers indices rose much more than expected in August. The overall composite index for the Eurozone only rose to 50.0 (which marks the dividing level between growth and contraction) while the output index for manufacturing rose to 47.9. Business activity in the services sector was only fractionally below the 50 level, at 49.5
Switzerland Sells UBS Stake
The Swiss government made a profit of 1.2 billion francs ($1.1 billion) from selling to institutional investors its investment in UBS AG, the country’s biggest bank. The government had bought last year 6 billion francs of UBS mandatory convertible notes last year to help the bank.
United Kingdom
Bank of England Meeting Minutes
The meeting minutes released last week showed that the Bank of England’s (BoE) nine-member Monetary Policy Committee voted 6 to 3 to raise bond purchases by only £50 billion to a total of £175 billion. The minutes also showed that Mervyn King, BoE’s Governor, was outvoted on its proposition to raise the quantitative easing to a total of £200 billion instead of the £165 billion. UK gilts rose and the Sterling pound fell against the euro and yen when the minutes were released.
UK Inflation Unchanged at 1.8%
The inflation in the United Kingdom remained unexpectedly unchanged at 1.8% in July on a year-on-year basis. The figure came against an expected drop in prices, supported by rise in costs of goods like computer games and DVDs. On a month-on-month basis, prices were flat for July. Earlier during the week, Mervyn King said that inflation is likely to remain volatile in the short term as it stays below the BoE target rate of 2%.
Retail Sector glimmers Hope
Retail sales data for July, released by the Office for National Statistics, pointed to an improving economy. They showed spending rising at 3.3% over the past year, close to the average annual rate since 1997 and above the forecasted level of 2.7%. Additionally, the Retail Price Index (RPI) showed that retail prices remained flat in July, and dropped by 1.4% on a year-on-year basis while analysts were expecting a sharper drop of 1.7%.
Japan
Climbing Out of Recession
Japan’s economy grew last quarter supported by the rebound in the global demand; the gross domestic product (GDP) expanded in the second quarter of 2009 at an annual rate of 3.7% pace, following an 11.7% decline (revised from -14.2%) in the previous quarter. However, the figure came below the median consensus forecast of a 3.9% rise. The bulk of the contribution to growth came from net exports; exports increased by 6.3% quarter-on-quarter (QoQ) whilst imports declined by -5.1% QoQ. Overall, net exports contributed 1.6% to Q2 growth. This comes as Japan’s exports to China are recovering in line with China’s recent stimulus measures.
Global
Highest Level for the Oil in 2009
Crude oil advanced to the highest level this year, following rising equity markets on speculation that the global recession is easing. Crude Oil futures for October delivery reached a high of 74.72 on Friday after starting the week at 69.60 dollars per barrel.
Kuwait
Dinar at 0.28700
The USD/KWD opened at 0.28700 on Sunday morning.
Rates
23-Aug-09 Spot Rate One Week Range 3-Month
Currencies Closing Rate Minimum Maximum Forward
EUR 1.4326 1.4160 1.4530 1.4325
GBP 1.6508 1.6330 1.6880 1.6500
JPY 94.38 92.50 95.80 94.35
CHF 1.0583 1.0360 1.0880 1.0570
