Weaker Canadian, Australian and U.S. Dollars

January 23, 2014

The U.S. dollar rose overnight by 1.0% against the Aussie currency and 0.6% versus the loonie but is down 0.9% relative to the Swiss franc, 0.3% against the yen and euro and 0.1 vis-a-vis sterling.  The kiwi dipped 0.1%, and the yuan is steady.

Preliminary euro area purchasing manager January survey results are somewhat better than forecast and consistent with continuing economic recovery from a low base at the start of 2014.

Share prices in the Pacific Rim fell 1.5% in Hong Kong, 1.2% in South Korea, 1.1% in Australia and Singapore, 0.8% in New Zealand and Japan, and 0.5% in China.  The British Ftse and German Dax are down by 0.7% and 0.2%, while equities in Italy and Spain have risen by 0.5% and 0.3% in contrast.  The Paris Cac is steady.

Ten-year yields on British gilts, Japanese JGBs and German bunds have fallen by four, two and one basis points.

The price of gold ($1,245.80 per ounce) advanced 0.6%, while WTI crude oil edged up 0.1% overnight to $96.81 per barrel.

Euroland’s composite purchasing managers index advanced 1.1 points to a 31-month high of 53.2 in January.  If that kind of acceleration holds up in February-March, real GDP growth of 0.4-0.5% is to be expected led by a 0.6-0.7% gain in Germany whose composite PMI climbed 1.9 points to a 31-month high of 55.9 in January.  The Ezone manufacturing and service-sector PMIs, according to these preliminary findings, were at 32-month and 4-month highs of 53.9 and 51.9.  Germany’s manufacturing and service PMIs printed up two points at 56.3, a 32-month peak, and 53.6, a 2-month high.

France remains Euroland’s sick economy with sub-50 January PMI readings of 48.5 on the composite index, 48.8 in manufacturing, and 48.6 in services.  Profit margins in France were squeezed further in January.  Nonetheless, the PMI scores constituted 3-month highs.

The HSBC-compiled preliminary Chinese purchasing managers index fell by 0.9 points to to a six-month low and sub-50 score of 49.6.  Forecasters were predicting a reading of 50.3.  Orders, like the overall score, swung from above to below 50, but production stayed in the black with a 51.3 reading.  China’s indices of leading and coincident economic indicators climbed 0.4% and 0.7% in December, the Conference Board reported.

Manufacturing sentiment in France according to INSEE remained at 100 in December.

Germany’s index of leading economic indicators went up 0.6% in November and was accompanied by a 0.3% rise in the index of coincident economic indicators.  Both gains were stronger than those in October.  But German construction orders sank 8.3% between November 2012 and November 2013.

The Confederation of British Industries reported a surprise 20-point drop in the distributive trades index to a +14 reading in January.

South Korean real GDP last quarter advanced by 0.9% from 3Q and by 3.9% on year after a 3.3% gain between 3Q12 and 3Q13.

Expected Australian inflation edged up 0.2 percentage points to 2.3% this month.  New Zealand’s business PMI slid 0.3 points to a still buoyant 56.4 in January.  New Zealand consumer confidence posted a strong gain this month.

Japanese stock and bond transactions generated a 192 billion net capital inflow last week versus a JPY 367 billion outflow in the prior week.

CPI inflation in Singapore decelerated to 1.5% in December from 2.6% in November.  There was a month-on-month price drop of 0.3%.

Unemployment in Spain hovered at an elevated 26% last quarter.  Sweden had a jobless rate of 8.0% in December, 0.5 percentage points less than in the Netherlands.  Danish consumer confidence improved 3.4 points to a reading of 6.3 this month.

The United States, which had been quiet data-wise on the first three days of this week, today releases existing home sales, the FHFA house price index, the index of leading economic indicators, the K.C. Fed manufacturing index, Markit Economics’ manufacturing PMI, the Chicago Fed National Activity Index, and weekly jobless insurance claims.  The preliminary estimate of Ezone consumer confidence and Canada’s retail sales figures also get released today.

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

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