Somewhat Firmer Yen

January 7, 2013

The yen, which had fallen sharply over the past 1-1/2 months, has corrected upward 0.3% against the dollar.  Finance Minister Aso spoke hopefully that a formal change in the Bank of Japan law may prove unnecessary.  The dollar also has lost 0.4% against the kiwi and 0.2% versus the Australian dollar, but it rose 0.2% relative to the euro and Swiss franc.  The greenback also edged 0.1% higher against sterling and is unchanged relative to the loonie and yuan.

Former Italian Prime Minister Berlusconi made an election campaign alliance with the right-wing Northern League, creating a more formidable opponent to supporters of the current prime minister’s reform agenda.

G10 Central bankers have diluted proposed Basel bank lending ratio goals, pushing back the deadline to 2019 from 2015 to avoid an excessive near-term liquidity crunch.

The Japanese Nikkei settled back 0.8%.  Share prices slipped 0.7% in Taiwan, 0.5% in India, and 0.4% in Indonesia but rose by 0.5% in China.  In European markets, The Paris Cac, German Dax and British Ftse show losses of 0.6%, 0.5%, and 0.3% so far.  Share prices are unchanged in Spain and off 0.1% in Italy.

The ten-year British gilt and German bund yields have fallen by three and one basis points.

Oil prices fell 0.5% to $92.60 per barrel.  The price of gold, in contrast, rose 0.3% to $1653.40 per ounce.

Japan’s monetary base showed accelerated on-year growth of 11.8% in December versus 5.0% in November.  The base climbed 7.0% in 2012, slightly less than half as fast as the 15.2% increase in 2011.  The Bank of Japan’s balance sheet widened to JPY 158.4 trillion at the end of 2012 from JPY 156.4 trillion at end-November and JPY 153.7 trillion at end-October.

Japanese motor vehicle sales were 3.4% lower in December than a year before.  Such had declined 3.3% in the year to November.

Taiwan’s trade surplus widened 21.5% on month in December, while CPI inflation there remained at 1.6% that month. 

British auto sales advanced 5.3% in 2012 but remained about 15% below their 2007 level.

The British Halifax house price index unexpectedly jumped 1.3% last month on top of a 1.6% increase in November, which trimmed the on-year 4Q12-over-4Q11 decline to just 0.3%.

But in Germany, the construction purchasing managers index dropped 5.1 points to a ten-month low reading of 43.3 in December.

J.P. Morgan’s global service-sector PMI had an unchanged reading of 54.8 in December, while the composite services and manufacturing PMI ticked marginally higher to 53.7 from 53.6.

The United Arab Emirates and Saudi Arabian non-oil PMI indices were reported.  The U.A.E. index strengthened 1.9 points to a 19-month high of 55.6, while the Saudi index rose 1.9 points as well to a reading of 58.9.

Swiss reserves dipped CHF 0.2 billion to CHF 427.2 billion last month, suggesting no intervention was needed to cap the franc’s strength.

Producer prices in the euro area dipped 0.2% in November and to a 12-month pace of 2.1% from 2.6% in October.  Energy fell 0.7%.  All other producer prices collectively edged 0.1% lower on month.  PPI inflation of 2.8% on year in Spain and Ireland was twice as much as Germany’s 1.4% 12-month increase.

The Sentix gauge of investor confidence in the Ezone improved to minus 7.0 in January from minus 16.8 in December and minus 30.3 last August.

Czech industrial production fell 0.8% in November and by 3.9% from a year earlier.  Construction output dropped 2.7% on year.  The Czech trade surplus of CZK 35.5 billion was close in size to October’s CZK 35.2 billion surplus.

Hungarian producer prices fell 0.7% in November and by 2.9% from twelve months earlier.  Norwegian unemployment ticked up to 3.2% in September-November from 3.1% in the previous three months. Irish retail sales posted declines of 1.1% on month and 0.5% on year in November. Iceland’s trade surplus halved to ISK 5 billion in December.  Finland recorded a EUR 210 million trade surplus in November versus a EUR 260 million deficit in October.

Romania’s central bank is holding its first policy meeting of 2013.  Interest rates are not likely to be changed. 

ECB President Draghi speaks publicly today, three days ahead of the monthly ECB Governing Council meeting.

There are no U.S. data releases scheduled.  The Canadian IVEY-PMI index will be released today.

Copyright 2013, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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