Euro Climbs to Best Level Since December 12
February 8, 2012
Although Greek officials still have not reached a final austerity package accord that would permit a second bailout of EUR 130 billion, progress is said to be occurring, and the euro advanced to $1.3290. That’s 5.3% stronger than the January 16th low of $1.2623. Investors seem to be concluding that there’s no realistic alternative to an agreement at the end of the day. Such may be wishful thinking.
From closing levels yesterday, the dollar is down by 0.3% against the kiwi, 0.2% versus the Aussie dollar and yuan, and 0.1% against the euro but up 0.2% against the yen and 0.1% versus the Swiss franc, Canadian dollar and sterling.
Share prices rose 2.9% in China, 2.1% in Taiwan, 1.5% in Hong Kong, 1.4% in Thailand, 1.1% in Japan and The Philippines, 0.9% in Malaysia, 0.8% in Singapore and Indonesia, and 0.4% in Australia. In Europe, the German Dax, Paris Cac, and British Ftse show smaller gains of 0.7%, 0.5% and 0.2% so far.
The yields on 10-year Japanese JGBs and German bunds firmed two basis points each. That on British gilts are a basis point higher.
Oil jumped 1.1% to $99.53 per barrel, but gold prices are unchanged at $1748.20 per ounce.
The race for the Republican presidential nomination ain’t over until its over. Former Pennsylvania Governor Rich Santorum swept yesterday’s trifecta of political tests, getting first place in the Minnesota and Colorado caucuses and taking top prize as well in the Missouri primary.
Japan’s seasonally adjusted current account surplus rebounded to JPY 752 billion in December from JPY 480 billion in November on the strength of a 1.7% increase in exports. However, the unadjusted current account surplus of JPY 304 billion was 74.6% smaller than a year earlier, and the 2011 surplus of JPY 9.629 trillion was 43.9% smaller than the 2010 surplus. Merchandise trade generated a deficit of JPY 1.61 trillion last year versus a JPY 7.98 trillion surplus in 2010 as exports fell 1.9% while imports rose 15.0%. Portfolio investment inflows dropped to JPY 890 billion in December from JPY 2.39 trillion in November.
Japan posted a JPY 1.56 trillion customs trade deficit in the first twenty days of January. January is ordinarily a weak month for Japanese trade due to the country’s long new year holiday, which hits exports more than imports. However, the size of this deficit is huge even by historical standards. In the first 20 days of January 2010, for instance, the deficit amounted to JPY 772 billion. In on-year terms, exports fell 11.9%, whereas imports climbed 12.6%. Japan is experiencing a structural change in what had been a major supportive factor for the yen.
Stock and bond transactions generated a JPY 2.142 trillion capital outflow from Japan in January. There were 2.6% fewer Japanese bankruptcies in January than in the same month a year earlier. Japanese bank lending posted the biggest on-year advance, albeit 0.6%, in January since October 2009.
Japan’s economy watchers index unexpectedly fell back to a reading in January of 44.1 from 47.0 in December. This was the weakest reading since 36.0 in May, when retail activity was severely hampered in the wake of the Sendai earthquake.
Iceland’s central bank left its benchmark interest rate at 4.75%. Officials are less bullish on future inflation and warned that the rate may need to rise again soon. Twenty-five basis point increases were administered in August and November of last year.
Interest rate announcements are expected from Poland’s central bank as well today and from the Bank of England and European Central Bank on Thursday.
The German unadjusted current account surplus printed in December at EUR 19.3 billion, identical to its December 2010 value. the 2011 surplus averaged EUR 11.3 billion per month, 4% less than in 2010. The seasonally adjusted merchandise trade surplus was EUR 13.9 billion in December, near the 4Q mean of EUR 13.8 billion and the 2011 mean of EUR 13.2 billion per month. Exports (11.4%) and imports (+13.2%) each showed double-digit growth last year, but the December-on-December gains were only 5.0% and 5.4%.
German real manufacturing turnover was 0.5% smaller in December than a year earlier but posted a 7.2% advance for 2011 as a whole.
The Bank of France projects no growth this quarter, similar to its expectation regarding 4Q11. The central bank’s gauge of business sentiment in the services sector fell a point to a 93 reading in January, while business sentiment in manufacturing remained soft with a score of 96. Opinion polls suggest that President Sarkozy will lose in elections set for April 22 and a run-off if needed on May 6.
British shop price inflation of just 1.4% last month was its lowest since November 2010. Non-food shop prices were unchanged from January 2011.
Spanish industrial production in December was 3.7% less than a year earlier adjusted for working day variations. Turkish industrial output was 3.7% higher in December than a year earlier, reflecting a loss of momentum late last year. Denmark’s current account surplus last year of DKK 119 billion was 22.5% wider than the 2010 surplus. The Swiss jobless rates of 3.4% unadjusted and 3.1% seasonally adjusted in December remained regionally low and were a tad better than forecast. Czech unemployment rose a half-percentage point to 9.1% in January. Cold weather was a factor.
Filipino CPI inflation slowed to 3.9% in January. M3 money in December was 6.3% higher than a year before. South Korean M2 posted on-year growth of 4.4% at the end of 2011.
Business sentiment in South Africa weakened two points to 97.1 in January.
Canadian housing starts and U.S. weekly oil inventories will be released today. Earlier came news that the U.S. 30-year fixed mortgage rate last week fell another four basis points, dipping below the 2011 low to a new trough of 4.05%. Mortgage applications rebounded 7.5% in the week of February 3rd.
Copyright 2012, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: German current account, Greek debt talks, Japanese current account, Rich Santorum