Yen at Six-Month Low; Euroland GDP Fell Modestly in 3Q

November 15, 2012

A lot of European data were released, but today’s main currency movement belongs to the yen.

Dollar/yen rose 1.1% to a 6-month high of 81.16.  The greenback rose 0.4% against the Aussie dollar but slipped 0.2% relative to the euro, Swiss franc, and loonie.  Sterling is unchanged, and China’s yuan is softer.

Stocks in the Pacific Rim rose 1.9% in Japan but fell 1.6% in Hong Kong, 1.2% in South Korea, 1.3% in China, 1.1% in Singapore and 0.9% in Australia.  In European trading, share prices are down 0.5% in Germany, 0.4% in Britain, and 0.1% in France and Italy, but they are 0.5% firmer in Spain.

The ten-year German bund yield firmed a basis point, while the 10-year Japanese JGB yield is a basis point lower.  British gilts are steady.

Gold prices softened 0.5% to $1721.20 per ounce.  Oil is 0.2% lower at $86.18 per barrel.

In earlier-than-scheduled Japanese lower house elections on December 16th, the LDP is expected to retake power from the Japanese Democratic Party, and that will return Shinzo Abe to the position of prime minister.  He was prime minister between September 2006 and September 2007.  The yen reacted negatively today to Abe’s call for much more stimulative fiscal and monetary policies.  Abe has a nationalistic foreign policy predisposition that created some controversy during his earlier stint at premier.

Xi Jinping was confirmed as Secretary General of the Chinese Communist Party.  He succeeds Hu Jintao.

Euroland GDP dipped 0.1% last quarter, matching expectations, and was 0.6% softer than in 3Q11.  GDP had been unchanged in the first quarter and slipped 0.2% in 2Q12.  Two straight negative quarters constitute a recession, but so far the region has avoided a pronounced contraction of activity.  Monthly data suggest the euro area will not be so lucky in the current quarter.

German, French and Italian GDP results were better than forecast.  Dutch, Czech, Hungarian, and Romanian GDP was weaker than assumed. 

  • German GDP rose 0.2% on quarter and 0.9% on year.
  • French GDP increased 0.2% as well and was 0.1% higher than a year earlier.
  • Italian GDP fell just 0.2% on quarter after a 0.7% tumble in the second quarter.  In on-year terms, the rate of contraction stayed at 2.4%.
  • Dutch GDP plunged 1.1% (not annualized) between 2Q and 3Q and was 1.4% below a year earlier.
  • Czech GDP fell for a fourth straight quarter, dropping 0.3% from 2Q and 1.5% from 3Q11.
  • GDP in Hungary dropped 0.2% and posted a larger-than-projected 1.6% decline from the third quarter of 2011.
  • Romanian GDP rose 0.5% versus 2Q and 0.8% versus a year before.

Greek GDP was 7.2% lower than in the third quarter of 2011 and 11.8% weaker than in the third quarter of 2010.

Portuguese GDP fell 0.8% last quarter, recording drops of 3.4% from a year before and 5.3% from 3Q10.

Spanish GDP dropped 0.3% on quarter and 1.6% on year.

Belgian GDP was unchanged last quarter and comparatively resilient in year-over-year terms with a drop of just 0.3%.

Austria GDP eased 0.1% in the latest quarter and, as in 2Q, showed a 0.4% on-year advance.

Finnish GDP rebounded 0.3% in 3Q from a 1.1% slump in 2Q.  GDP was 0.8% softer than in 3Q11.

In recession-stricken Cyprus, GDP fell another 0.5% in the quarter and posted a 2.3% on-year contraction.

British retail sales provided further disappointment to an investment community desperate for a piece of good news.  Such sank 0.8% in October instead of holding steady as analysts had thought.  Sales were just 0.6% higher than a year earlier.  Non-fuel retail sales dropped 0.7% on month and experienced on-year growth of just 1.1%.

Euro area consumer prices confirmed the flash estimated monthly increase of 0.2%.  The 12-month increase of 2.5% was a tenth percentage point less than in September and August and 0.5 percentage points lower than in the year to October 2011, but it remains considerably above the ECB’s definition of price stability (below but close to 2.0%).  Core inflation in October stood at 1.5% for a third straight month.  Energy prices were 8.0% higher than a year earlier, and food, alcohol and tobacco prices recorded a 3.1% on-year advance.

Danish wholesale price inflation eased to 3.5% from 4.1% in September.  Irish PPI inflation increased to 2.9% from 2.2%.

Swedish unemployment settled back in seasonally adjusted terms to 7.7% last month from 7.8% in September.  The unadjusted jobless pace was 7.1%.  Dutch unemployment edged higher to 6.8% in October from 6.6% in September.  Turkey’s 8.8% jobless rate in August was 0.4 percentage points higher than in July.

Italy’s current account deficit widened 2% on month to EUR 2.58 billion in September.  Finland’s current account improved by EUR 99 million to a surplus of 73 million euros.  Norway’s trade surplus of NOK 31.78 billion last month was 34.8% wider than in September.

Wholesale sales in South Africa slumped 4.4% in September and were just 0.1% above the year-earlier level.

Japanese stock and bond transactions last week generated a JPY 109 billion outflow versus a 17 billion yen inflow in the previous week.

Australian motor vehicle sales fell 2.8% in October and to an 8.6% 12-month rate of increase from 14.4% in the year to September.  Expected Australian inflation slowed to a 44-month low of 2.2% in November.

Retail sales in Singapore dropped 0.5% in September and were 2.5% above the year-earlier level.  Filipino industrial production growth accelerated to an 8.0% 12-month increase in September.

U.S. FOMC minutes released yesterday afternoon suggest new stimulus will be forthcoming at the meeting next month and revealed a growing commitment to instituting future policy guidelines that will be defined mechanistically in terms of economic data trends.  Officials felt that the U.S. economic outlook had not improved since their prior September meeting.

Scheduled U.S. data releases today include consumer prices, the Empire State and Philly Fed manufacturing indices, and jobless insurance claims.  Many Fed officials will be speaking publicly today, including Bernanke, Dudley, Plosser, Fisher and Lacker.  Canadian existing home sales get reported.

Copyright 2012, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

Tags: , , ,


Comments are closed.