Firmer Yen Ahead of ECB and Bank of England Decisions
December 8, 2011
Analysts are projecting a likely ECB rate cut at 12:45 GMT. Just in from the Bank of England is confirmation of no change in its monetary policy settings of a 0.5% Bank Rate and a GBP 275 billion ceiling on asset buying.
There have been some bad vibrations out of Brussels, suggesting continuing disagreement over fiscal unity and the role of the ECB in efforts to protect EMU. Overnight borrowing from the central bank’s lending facility spiked to EUR 9.4 billion, highest in nine months. EU-27 leaders began their summit in Brussels.
The dollar is 0.4% softer against the yen and also 0.2% down against the kiwi. The greenback has firmed 0.2% relative to the euro, 0.1% against sterling, and shows no changes versus the Swissie, Aussie dollar, Canadian dollar and yuan.
Stocks in the Pacific Rim dropped 2.3% in India, 2.0% in Singapore, 0.7% in Japan, Malaysia, Taiwan and Hong Kong, 0.4% in South Korea and New Zealand, and 0.3% in Australia and Thailand. The German Dax and British Ftse are 0.1% stronger.
German 10-year bund yields are unchanged. The 10-year British gilt slid three basis points, and the Japanese JGB is one bp lower.
Oil and gold prices respectively rose 0.3% and slid 0.2% to $100.70 per barrel and $1741.50 per ounce.
Central bank policymakers decided to leave benchmark interest rates unchanged in Peru, Indonesia, and South Korea. Those respective rate levels are 4.25%, 6.0%, and 3.25%.
Several Japanese economic indicators were reported.
- Japan’s current account surplus plunged to JPY 562 billion in October from JPY 1495 billion a year earlier. In seasonally adjusted terms, such fell 56.3% from September’s JPY 1.187 trillion surplus to JPY 519 billion in October. The seasonally adjusted trade deficit shot up to JPY 527 billion from JPY 92 billion the month before, as imports jumped 7.7% and exports fell by 4.4%.
- Stock and bond transactions generated a JPY 514 billion net capital outflow last week after a JPY 306 billion outflow in the week of November 26.
- Machinery orders suggest stalling activity. Core private domestic orders posted a monthly drop of 6.9% in October on top of an 8.2% decrease in September and were only 1.5% higher than a year before. They were also 9.1% below the average 3Q level; officials have projected a 4Q-over-3Q decline of just 3.8%. Foreign orders in October were 6.0% lower than their 3Q average, and public sector machinery orders were down 0.7% on such a basis.
- Japan’s economy watchers index, a gauge that captures trends in service sector activity from the standpoint of providers, fell back to a reading of 45.0 in November from 45.9 in October. 45.0 constitutes a six-month low.
- Bank lending was only 0.2% higher than a year earlier in November. Nonetheless, that marked a two-year high.
- Bankruptcies in November surpassed the year-earlier level by 3.9%.
Australian labor market data were weaker than expected. The jobless rate edged up to 5.3% in November from 5.2% the month before, and employment fell 6.3K overall with a 39.9K slump in full-time positions. The participation rate slid a tenth of a percentage points to 65.5%.
New Zealand manufacturing output index was unchanged last quarter, a two-year low. Turkish industrial production increased 7.3% in the year to October, up from a 6.0% 12-month rate of rise in September. Malaysian industrial production rose 2.8% on year in October, up from 2.5% in the year to September. Consumer confidence in Thailand softened to a score of 61.0 in November from 62.8 in October.
Greek consumer price inflation of 2.9% in November was a tenth less than the month before. The Greek jobless rate settled back to a still-painful 17.5% in September from August’s record of 18.4%. Unemployment still remained 4.9 percentage points greater than a year ago.
Dutch consumer price inflation held steady in November at 2.6%. Irish CPI inflation rose to 2.9% last month from 2.8% in October. Czech unemployment edged up a tenth to 8.0% last month, while the Czech current account deficit in 3Q of CZK 42 billion equaled 2.6% of GDP.
French business sentiment according to the Bank of France’s measure fell by a point to 95 in November and was 15 points less than at the start of 2011. French nonfarm employment was 1.2% higher than a year earlier in the third quarter.
South African factory output slumped 3.6% in October and to only a 1.0% 12-month rate of rise. The South African current account deficit widened last quarter to 115 billion rand, equal to 3.8% of GDP.
Scheduled U.S. data today are wholesale sales and inventories and weekly jobless insurance claims. Canada reports home prices, and Mexican CPI and PPI figures get released.
Copyright 2011, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: Bank of England, ECB, EU summit, Japanese economy watchers index and current account
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