Aussie and New Zealand Dollars Weaken while Euro and Swissie Strengthen

November 22, 2013

The U.S. dollar has risen 0.7% and 0.6% against the Oz and kiwi but is 0.3% softer relative to the euro and Swiss franc.  The dollar also climbed 0.3% relative to the loonie and is unchanged vis-a-vis the yen, yuan and sterling.

Share prices rose 0.9% in Australia, 0.6% in South Korea, 0.5% in Hong Kong, 0.2% in Taiwan and a mere 0.1% in Japan, while dropping by 0.5% in China, 0.2% in Indonesia and 0.1% in India.  In Europe, equities are also mixed, with gains of 0.3% in Spain and 0.2% in France but dips of 0.4% in Italy, 0.2% in Britain and 0.1% in Germany.

Gold and oil prices slid by 0.2% and 0.3% to $1,241.10 per ounce and $95.18 per barrel.

The 10-year Japanese JGB and German bund yields are steady.  The 10-year British gilt dipped a basis point.

The German IFO Economics Institute reported a strong business climate reading of 109.3 for November compared to 107.4 in October and 101.6 in November 2012.  The component for current conditions climbed 0.9 points to 112.2, while that for future expectations went up by 2.6 points on month to 106.3.  All sectors improved: manufacturing and wholesaling each by 4.0 points, construction by 3.1 points, and retailing by 1.8 points.  The IFO services climate index jumped 3.6 points to a score of 19.1, which matches the September reading.  November’s improvement in services was concentrated in a 5.2-point leap in the expectations component.  Service-sector firms plan to hire more staff.

Revised German 3Q GDP data with details on different sources of aggregate demand confirmed quarterly growth of 0.3% and an on-year GDP advance of 1.1% but 0.6% when corrected for the different number of working days.  The growth rate was less than half as strong as 0.7% seen last spring because of a 0.4 percentage point drag from net foreign demand.  Inventories augmented the growth rate by 0.2 percentage points.  Between 2Q and 3Q, personal consumption edged just 0.1% higher, and government spending rose 0.5%.  Investment in machinery and equipment advanced 0.5%, while construction leaped 2.4% on top of a 1.9% jump in 2Q.

BOJ Governor Kuroda and ECB President Draghi spoke overnight.

  • Kuroda said the yen is not too weak and discouraged speculation that monetary stimulus will need to be reinforced — certainly not in the near term.
  • Draghi stressed that monetary policy cannot be tailored to any one economy but must address average economic trends in the whole euro area.

There was no surprise from the monthly Bank of Japan economic assessment, which maintained the existing view of a moderate recovery with inflation now positive and expected to rise gradually eventually.

Italian retail sales slipped 0.3% in September and were 2.8% weaker than a year earlier.  Swedish consumer sentiment improved 2.8% to a much higher reading of 104.9 than had been forecast.  According to the Conference Board, Germany’s index of leading economic indicators rose 0.2% in September, but the index of coincident economic indicators took a 0.1% step backward.  Industrial production in Austria posted drops of 0.5% on month and 0.1% on year in September.  Wage inflation in Iceland ticked a tenth percentage point higher last month to 6.0%.

Canada will be releasing figures today on retail sales and consumer prices. U.S. scheduled data arrivals include the Kansas City Fed manufacturing index and the Labor Department JOLTS index of layoffs and hirings.  KC Fed President Esther George, one of the FOMC’s most outspoken hawks, speaks publicly.

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

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