Ahead of an Important U.S. Jobs Report

February 7, 2014

Overnight movements in the dollar have been limited to dips of 0.1% against the loonie and sterling and upticks of 0.3% versus the Aussie dollar and 0.1% vis-a-vis the yen and euro.  The dollar is also unchanged against the kiwi, yuan and Swiss franc.

Share prices in the Pacific Rim climbed 2.2% in Japan, 1.6% in the Philippines, 1.0% in Indonesia and Hong Kong, 0.8% in Singapore, 0.9% in Taiwan, 0.7% in New Zealand and Australia, 0.5% in China and 0.3% in India.  Stocks in Europe show gains of 0.2% or less in Paris, London, Frankfurt, Madrid, and Milan.

The ten-year Japanese JGB and British gilt yields edged a basis point higher, and the German bund is steady.

Gold firmed 0.4% to $1,262.20 per ounce, but oil dipped 0.2% to $97.63 per barrel.

20-day January Japanese customs trade figures point to a likely full-month record deficit.  The 20-day deficit of 2.015 trillion yen was 71.3% larger than a year earlier, with imports shooting up 30.2%, almost three times faster than the 11.3% rise of exports.  Japan is counting on a weak-yen boost to export competitiveness to compensate for the lull in domestic demand that will follow the planned consumption tax hike in April.

Japan’s index of leading economic indicators rose 1.1 points to 112.1 in December, highest since February 2007.  The coincident index was at the best level since May 2008.  Japanese reserves rose $10.2 billion in January to $1.277 trillion.  Officials reported that no currency intervention was conducted in the last quarter of 2013.

China’s services purchasing managers index, compiled by HSBC, dipped another 0.2 points to 50.7.  Showing barely any positive growth, the pace was its weakest in over 15 months.  The composite PMI fell 0.4 points to a six-month low of 50.8.

Australia’s construction PMI crossed back over the 50 threshold to a contractionary reading of 48.2.  That was a 4-month low after 50.8 in December, 55.2 in November and 54.4 in October.

British industrial production increased 0.4% in December and 1.8% from a year earlier.  Output went up 0.5% in 4Q and was 2.3% greater than in the final quarter of 2012.  The U.K. goods and services trade deficit narrowed sharply to GBP 1.026 billion in December from GBP 3.582 billion in November.  The deficit in 2013 of GBP 29.85 billion 11.3% smaller than the deficit in 2012.

Germany recorded a EUR 23.5 billion current account surplus in December, bringing the full-2013 surplus to EUR 201 billion, 7.4% bigger than in 2012.  The seasonally adjusted merchandise trade surplus of EUR 18.5 billion in December compares favorably to a monthly average of EUR 18.0 billion in the fourth quarter and EUR 16.5 billion in full-2013.

German industrial production fell 0.6% in December, fooling analysts who were predicting a rise of about 0.5%.  Output increased 0.2% in 4Q after a gain of 0.8% in the third quarter.  Production was 2.6% greater on-year in December. 

Swiss retail sales volume dropped 0.7% in the final month of 2013 but was 2.3% higher than at end-2012.

The French trade deficit narrowed 8.3% on month in December and fell by 8.9% to EUR 61 billion in full-2013.

Swedish industrial production sank 1.0% both on month and on-year in December following very strong gains in November.

Speculation ahead of the U.S. jobs report centers on employment growth of around 185K.  This is a particularly important number as the Fed just changed leadership and U.S. data lately have been mixed.  There’s a lot of uncertainty regarding this release because of the harsh weather and annual benchmark data revisions that are planned.  Canada also releases its monthly labor force survey

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

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