Weaker Aussie Dollar and a Bunch of Items of Interest

January 16, 2014

The Aussie dollar fell 1.2% against its U.S. counterpart.  The U.S. dollar otherwise slipped 0.3% against the loonie and Swiss franc, 0.2% relative to the yen and 0.1% against the euro.  The dollar also firmed 0.2% against the kiwi, yuan and sterling.

Brazil’s Selic interest rate has been raised by a further 50 basis points to a 24-month high of 10.5%.  Analysts were anticipating only a 25-basis point increase.

The Bank of Serbia’s one-week repo rate was left at 9.5%, breaking a string of reductions that analysts thought would be extended.

U.S. new jobless insurance claims totaled 326K last week, down by 2K.  The four-week average of 335K was down from 343.5K in the four weeks to December 14.

U.S. consumer prices as expected rose 0.3% in December and recorded a larger 12-month increase of 1.5% after 1.2% in the year to November.  Core inflation remained at 1.7%.  In the prior year between end-2011 and end-2012, total CPI inflation was 1.7%, and the core inflation rate was 1.9%.  A 2.1% monthly increase in energy prices provided a significant inflationary impulse last month.

In the euro area, consumer prices went up 0.3% in December, but the 12-month pace dipped to 0.8% from 0.9%.  Core inflation fell to 0.9% from 1.1% in November.  Total and core inflation in December 2012 had been 2.2% and 1.6%.  Between December 2012 and December 2013, total CPI inflation slowed to 1.2% in Germany from 2.0%, to 0.8% in France from 1.5%, to 0.7% in Italy from 2.6%, to 0.3% in Spain from 3.0%, to 1.4% from 3.4% in the Netherlands, to 1.9% from 3.5% in Finland, to minus 1.8% from +0.3% in Greece and to minus 1.3% from +1.5% in Cyprus.  Deflation is a clear and present danger in the region.

The Australian dollar was hit by poor labor market data.  Jobs, which had been forecast to rise 10K, instead dropped 22.6K in December, including a 31.6K plunge in full-time positions.  The labor participation rate eased to 64.6% from 64.8%, and the unemployment rate held at 5.8%.

Japan’s Nikkei closed down 0.4% after several upbeat Japanese indicators were released.

  • Japan’s tertiary index, a gauge of service-sector activity, rose 0.6% in November, a 3-month high, following a 0.9% drop in October.  But the index was only 0.4% greater than its year-earlier level, and it averaged 0.3% less than the 3Q mean in October-November combined.
  • The BOJ balance sheet, which showed only marginal change during the month of December, increased 2.4% over the first ten days of January.
  • Domestic corporate goods prices rose 0.3% on month in December, most since July, and climbed 2.5% on year versus a 0.7% drop between end-2011 and end-2012.  Oil products advanced 1.9% on month and 12.1% on year.
  • Core domestic machinery orders leaped 9.3% in November, much more than street forecasts hovering around a 1% gain.  However, public-sector and foreign orders for machinery recorded monthly plunges of 11.9% and 12.2%.

In other Pacific Rim stock markets, equities rose 1.2% in Australia, 0.4% in Hong Kong, and 0.2% in New Zealand and South Korea but fell by 0.7% in Indonesia and 0.1% in India and Singapore.  In Europe, the British Ftse is unchanged, but stocks are down by 0.6% in Italy, 0.3% in Germany, Spain and France.

The ten-year British gilt yield slipped three basis points, while the 10-year German bund is unchanged.  The 10-year Japanese JGB rose two basis points.

Gold ($1,236.90 per ounce) and WTI crude oil ($94.38 per barrel) have barely moved overnight.

Foreign direct investment in China was 3.3% higher in December than a year earlier.  FDI rose 5.3% in 2013 as a whole following a 3.7% drop in 2012.

The Royal Institute of Chartered Surveyors British house price index dipped unexpectedly to 56% in December from 58% in November.

Ireland, Italy, and Belgium reported November trade figures.  Ireland’s surplus narrowed 15.3% on month to EUR 2.54 billion.  Italy’s EUR 2.99 billion surplus was little changed.  The Belgian balance swung to a deficit of EUR 0.3 billion from an October surplus of EUR 0.2 billion.

Still to come today are public comments from Bernanke and Williams of the Fed, the Philly Fed manufacturing index, and an interest rate announcement from the Chilean central bank.

Copyright 2014, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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