Resumed Yen Slide Continues

May 10, 2013

The yen touched lows today of 101.75 per dollar and 132.29 per euro and is 1.1% softer against the U.S. currency than at Thursday’s close.

The U.S. dollar also has risen 0.9% against the Swiss franc, 0.8% versus the kiwi, 0.7% relative to the Australian dollar, 0.3% against the euro and pound, 0.2% versus the yuan, and 0.1% relative to the loonie.  The dollar is being bid up on speculation that the Fed may trim back sooner rather than later the size of its monthly asset purchases.

A meeting of G7 finance ministers and central bankers convened today in Britain and will conclude tomorrow.  Japanese officials have been given a green light to pursue ultra-easy monetary policy and a more expansionary fiscal policy.

Bond yields are higher, and so are most share prices.

  • Ten-year Japanese JGB, British gilt and German bund yields have risen by nine, six and three basis points.
  • Equities climbed 0.9% in the Philippines, 0.7% in India, 0.5% in China and Hong Kong, 0.4% in Malaysia, 0.3% in Indonesia, Singapore and New Zealand, and 0.2% in Australia.  An exceptions was a  decline of 1.8% in South Korea’s Kospi index.  Stocks also dipped 0.2% in japan and 0.1% in Taiwan.  In Europe, the German Dax and Paris Cac are up 0.8%, and the British Ftse and Spanish Ibex are 0.6% higher. 
  • In Italy, the 1-year sovereign debt yield of 0.7% was at a record low, and share prices have increased 1.5%.

Gold and oil prices fell by 1.7% to $1443.60 per ounce and 0.7% to $95.69 per barrel.

Japanese bank lending growth accelerated to a 12-month pace of 1.7% in April from 1.4% in the first quarter and 1.0% in the final quarter of 2012.

Japan’s economy watchers index, a gauge of economic conditions perceived by service sector workers, dipped 0.8 points to 56.5 in April.  Such was the third straight reading above 50 and compares to a low of 39.0 last October.  Japanese bankruptcies recorded a smaller on-year drop of 10.5% in April following a 20% plunge in March.

Japan posted a seasonally adjusted JPY 342 billion current account surplus in March, swinging from a JPY 28 billion deficit the month before.  Merchandise exports rose 5.8% on month, while imports slid 1.3%.  The unadjusted current account surplus of JPY 1.251 trillion was just 4.3% smaller than in March 2012 but the fiscal 2012 current account surplus of JPY 4.29 trillion was 43.6% narrower than the JPY 7.62 trillion surplus in fiscal 2011.  Exports dropped 1.7% last fiscal year after a decline of 2.8% in fiscal 2011.

Japan’s customs trade deficit in the first twenty days of April, JPY 754 billion, was down from a shortfall of JPY 807 billion a year earlier.  Exports and imports registered on-year growth of 5.3% and 3.1%.

Japanese stock and bond transactions generated a JPY 6.05 trillion net capital inflow during April.  Japanese residents bought JPY 310 billion net of foreign bonds last week after purchasing JPY 204 billion of such in the week to April 27.

The German current account surplus in the first quarter of EUR 44.9 billion was similar in size to the 1Q12 surplus of EUR 45.7 billion surplus.  Exports and imports recorded year-over-year declines of 1.5% and 3.5% in 1Q.  The seasonally adjusted trade surplus in March was EUR 17.6 billion, a bit above the first-quarter monthly average of EUR 17.0 billion.  The trade surplus averaged EUR 15.7 billion per month in 2012 and EUR 13.2 billion per month in 2011.

Britain’s trade deficit in goods and services narrowed 7.7% in March to GBP 3.13 billion.  The goods deficit of GBP 9.06 billion followed a gap of GBP 9.17 billion in February.  Exports and imports rose by 4.9% and 3.2% on month. 

Portugal’s trade deficit shrunk 16.6% on month to EUR 1.86 billion in March.  The Cypriot trade gap of EUR 252 million was down 12.2% from February.  Romania’s trade deficit, on the other hand, widened more than twofold to EUR 570 million from EUR 210 million in February, and Hungary’s trade surplus was 12% wider in March at EUR 753 million.

The Central Bank of Peru main 4.25% interest rate was left unchanged as expected. 

The quarterly Monetary Policy Statement released by the Reserve Bank of Australia noted underlying economic resilience but said a peak in mining sector investment is peaking and the overpriced Aussie dollar will exert another drag.  GDP in 2013 is projected to grow by 2.5%.

Chinese M2 and M1 on-year money growth in April of 16.1% and 11.9% surpassed analyst expectations, but M0, which slowed to 10.8% from 12.4% in March, fell short of expectations.  New loans amounted to CNY 793 billion in the latest month, down from CNY 1.06 trillion in March but about 5% greater than forecast.

GDP in Hong Kong expanded by a smaller-than-predicted 0.2% between 4Q12 and 1Q13, leaving the on-year pace at 2.8%.

Industrial output in India was 2.5% higher in March than a year earlier.

Italian industrial production data were again very weak, posting declines in March of 0.8% from February and 5.2% from March 2012.  Greek industrial output recorded a much smaller 0.7% year-on-year decline in the same month, while Finnish production accelerated to a 12-month 2.9% advance.

British construction output fell 2.4% last quarter to the lowest level since the last quarter of 1998.

Norwegian consumer prices rose 0.6% in April and accelerated by 0.5 percentage points to a year-on-year pace of 1.9%.  But Norwegian producer prices fell only half as much (1.6%) from a year before.  Czech CPI inflation held steady at 1.7%, and the Czech jobless rate fell 0.3 percentage points to 7.7% last month.  Danish CPI inflation ticked down 0.1 ppt to 0.8% in April.

The Canadian jobless rate held steady at 7.2% last month.  Public sector workers (up 34.2K) accounted for all of the net 12.5K advance in employment.  There were 20.6K more factory workers, but 12K fewer people employed in the services sector.

The U.S. monthly budget numbers arrive today, and Evans, George, and Bernanke of the Fed speak publicly.

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

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