Financial Markets…The dollar tumbled to seven-month low against the yen and global equities subdued in cautious trading on Thursday as investors awaited a statement by the Federal Open Market Committee later in the day. The greenback suffered from expectations for a third round of quantitative easing.
Stock market investors curtailed some of their resurgent risk appetite as the Fed statement is also expected to signal a weak U.S. economy. Higher-than-expected jobless claims in U.S. also weighed negatively on investor sentiment.
U.S. Treasury price advanced, snapping a two-day loss, with the benchmark 10-year yield sliding 3 basis points to 1.73%.
Among Developed Economies…US initial unemployment claims jumped 15,000 to a seasonally adjusted 382,000, the highest in two months, in the week ending September 8 mainly due to the effect of Tropical Storm Isaac; the four-week moving average rose 3,250 to 375,000 [see Chart at http://prospects or http://www.worldbank.org/prospects]. US producer prices rose 1.7% (m/m) in August adding to July’s 0.3% gain, mainly due to a 6.4% increase in energy prices.
Swiss producer prices rose 0.5% (m/m) in August, contributing to a slowing of the pace of decline in the annual inflation rate to -0.1% in August from -1.8% (y/y) in July. The central bank kept its benchmark interest rate at zero reaffirmed its commitment to maintain the currency ceiling at 1.20 Swiss francs per euro.
Dutch retail sales fell 4% (y/y) in July following a 1% (y/y) increase in June mainly due to decline in non-food sales.
Sweden’s consumer price inflation edged up 0.1% (m/m) in August, but remained stable on a year-on-year basis at 0.7% (y/y).
Bank of Korea kept its interest rates unchanged at 3.00%. Inflation fell to 1.2% in August (y/y) - the weakest level in 12 years, below the central bank's target range of 2 to 4 percent.
Hong Kong's industrial production fell 2.9% (y/y) in the second quarter, faster than the 1.6% decline in Q1.
Poland's consumer price inflation increased to 3.8% (y/y) in August, dropping from July's 4% (y/y) gain.
Among Developing Markets…In East Asia and Pacific, Indonesia's central bank left the benchmark rate unchanged at 5.75 percent for a seventh consecutive month, saying that the current rate is consistent with the inflation forecast, which is expected to be kept within its target range of 3.5-5.5 percent in 2012.
Philippine’s central bank kept its overnight borrowing rate at 3.75 percent. Inflation may average 3.4 percent in 2012, compared with earlier projections of 3.1 percent, but within the targeted range of 3-5%, due to higher oil prices and supply disruptions caused by floods.
In Europe and Central Asia, Russian Central Bank made a decision to increase its refinancing rate to 8.25% from 8.00% today.
In Latin America and Caribbean, Brazilian retail sales volume rose a seasonally adjusted 1.4% in July compared with June, translating into a 7.1% (y/y) growth in July.
In Sub-Saharan Africa, the central bank of Mozambique has reduced its benchmark lending rate by 100 basis points to 10.50% with an objective to stimulate economy.
South Africa’s mining production increased by 6.7% (y/y) in July, from a revised increase of 4.7% in June.