Thursday, May 5, 2011

World economic news may 5 2011

World economic news may 5 2011, China , Australia, uk, Portugal

China - Deputy Minister of Finance has reiterated that curbing inflation is a big challenge for the country and priority number one.

* Former People's Bank of China advisor has stated that global demand for the yuan is now so strong the Central Bank should reduce its level of intervention in the markets to allow the currency to find its natural footing.

* Forex reserves climbed in the first quarter to US$3trillion as the central bank bought currencies in order to control the yuan's gain.

* New forecasts suggest that inflation eased in April to 5.2%

US - Bloomberg is reporting that two Fed regional Presidents have stated that stimulus will not be removed in the short term as the country is still missing its targets with regard to unemployment. Yesterday the ADP Employer Services announced a smaller than expected gain in private payrolls, increasing negative sentiment before the more important non farm payroll figures released on Friday.

* Forecasts ahead of report today suggest that productivity of US workers slowed in Q1 as a result of companies having to add more workers.

UK - Sluggish growth is being cited by the National Institute for Economic and Social Research as it forecasts that the Government will miss its goal to balance the budget by 2015. The think tank blamed an "unbalanced policy mix" as the defining reason.

Australia - Figures released this morning showed that retail sales unexpectedly fell in March for the first time in the last 6 months. Sales declined by 0.5% from a month earlier. The decline is being attributed to consumers facing higher mortgage and living costs.

* The RBA left its rates on hold on Monday.

Portugal - Reports this morning suggest that up to 15% of the country's bailout or 12bn euros will be used to support the country's banking industry, specifically those banks that fail to reach the new capital requirement ratios. The Government has stated that banks that fail to reach the 9% tier one capital requirements by the end of the year and 10% by the end of next year will be forcibly recapitalised.

Currency - Speculation that the ECB will raise rates again has helped the euro rise towards a 17 month high against the dollar. The dollar is off again this morning and the South African rand is also weaker against the dollar.

US$1.487/eur vs $1.486eur yesterday. Yen80.30/$ vs 81.05/$, SAr6.654$ vs 6.628/$ $1.647/GBP vs 1.652/GBP
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