Weaker Yen and Gold, Firmer Dollar, and Soft Data

November 14, 2014

The yen dropped 0.6% against the dollar to a new multi-year low of 116.51 and fell also to a 10-month low of 145.09 per euro.

The U.S. currency otherwise advanced 0.3% against the euro, Australian dollar and sterling, 0.2% versus the Swiss franc and kiwi and 0.1% relative to the yuan.

The Swiss currency continues to trade near the Swiss National Bank’s intervention trigger point of 1.2000 per euro.

European equities are lower after preliminary Ezone GDP data were released.  Losses so far amount to 0.5% in Germany, Italy, and Switzerland, 0.4% in France, 0.7% in Spain, and 0.3% in Britain.  Japan’s Nikkei-225, in contrast, extended its uptrend by 0.6% to 17,491.  Stocks rosse 0.4% in New Zealand and India, 0.3% in Hong Kong, 0.2% in Australia and 0.1% in China, but the South Korean Kospi index dropped by 0.8%.

Gold sank another 0.9% to $1,151.60 per ounce.

After dropping sharply on Thursday, WTI oil has bounced up 0.2% to $74.35 per barrel.

The ten-year German bund yield, which dipped under 0.80% yesterday, remains at 0.79% in spite of confirmation that German GDP did not decline for a second straight quarter.  Ten-year British gilt and Japanese JGB yields each declined two basis points.

Chinese money and credit data got trading off to a wary start overnight.  Yuan lending of CNY 548.3 billion in October and on-year growth of 12.6% in M2 money, 3.2% in M1 and M0 were all below analyst expectations and weaker than September results of CNY 857 billion, 12.9%, 4.8% and 4.2%, respectively.

A slew of preliminary third-quarter GDP growth reports produced the following outcomes:

  • Euroland GDP went up 0.2%, marginally beating expectations.  2Q GDP had risen 0.1%, and GDP was 0.8% higher than a year earlier and just 0.5% greater than two years before (that is, versus the third quarter of 2012).
  • German GDP rose 0.1%, reversing a 0.1% drop in 2Q and cutting on-year growth to 1.2% from 1.4% in 2Q.  GDP climbed just 1.5% over the past eight quarters, that is 0.7% per annum.
  • French 3Q GDP growth, +0.3% versus 2Q, surprised on the upside.  French GDP rose 0.4% on year and 0.3% per annum over the past 8 quarters.
  • Italy’s recession continues.  Italian GDP, down by 0.1% on quarter and 0.4% on year, met market expectations.  Italian GDP had declined 1.9% in the year to 3Q13.
  • Spanish GDP rose 0.5% on quarter, matching the average pace in 1H14.  After declining 1.1% in the year to 3Q13, GDP rose 1.6% over the past four reported quarters.  Spain’s index of leading economic indicators rose just 0.1% in September, however, according to the Conference Board.
  • Dutch GDP edged up 0.2% on quarter, leaving the four-quarter advance unchanged at 1.1%.  GDP dropped 0.5% in the prior statement year to 3Q13.
  • Greece recorded a third straight quarter of positive growth, this time of 0.7%.  GDP rose 1.4% on year after a 3.2% slump in the four quarters to 3Q13.
  • Portuguese GDP rose 0.2% last quarter, a shade less than in 2Q and below market expectations.  GDP was 1.0% higher than in 3Q13 but little changed from the third quarter of 2012.
  • The recession in Cyprus remains substantial.  GDP there fell another 0.4% on quarter and 2.0% on year after tumbling 5.7% in the year to 3Q13.
  • Austrian GDP, as in 2Q, was unchanged on quarter, producing a lower 4-quarter rise of just 0.3%.
  • Belgian GDP went up 0.2% on quarter and by 0.8% on year.
  • Finnish GDP also rose 0.2% on quarter but was 0.3% lower than a year earlier.  Finnish retail sales were unchanged in the year to September.

There were a number of non-Ezone GDP data releases, too.

  • In Hong Kong, GDP grew 1.7% in 3Q following a 0.1% dip in 2Q.  On-year growth accelerated to 2.7% from 1.8% in the prior quarter.
  • Malaysian GDP increased 0.9% in 3Q, almost twice expectations, but on-year growth there slowed to 5.6% from 6.4%.
  • Hungarian GDP growth decelerated to a quarterly rate of 0.5% from 0.8% in 2Q and 0.9% in each of the prior two quarters.
  • Czech GDP growth of 0.3% matched the second-quarter result.  Over the prior two quarters to 1Q14, GDP had risen 0.8% per quarter.
  • Poland remained one of eastern Europe’s best performer, with GDP growth of 0.9% from 2Q and 3.4% from a year earlier.
  • Romania also stayed at the top of the leader board, with GDP rising 1.9% on quarter and 3.3% on year.

British construction output rebounded 1.8% in September.  Following a 3.0% slide in August, that bounce was smaller than expected and hoped. 

Ezone consumer price inflation in October ticked up 0.1 percentage point to 0.4% in October, the third such level in the past four months.  Consumer prices fell 0.1% on month, and the 12-month rise was down from 0.7% posted in the year to October 2013.  Core inflation slowed to 0.7% last month from 0.8% in three of the four prior months as well as in October 2013.  In the year to October, energy prices dropped 2.0%, while all other consumer prices rose by 0.7%.  Service sector prices increased 1.2%, but non-energy prices for industrial goods slid 0.1%.

Greek import prices sank 1.1% on month and 3.9% on year in September.

Wholesale price inflation in India continues to abate, slowing to 1.8% in October from 2.4% in September. 

Retail sales in Singapore were 5.5% above the year-earlier level in September.

Peru’s central bank interest rate was left at 3.5% as expected.  There were three cuts enacted earlier in 2014.

U.S. retail sales get released shortly and the U. Michigan consumer sentiment index arrives a little later this morning.  Canada’s monthly survey of manufacturing sales, orders and inventories is also due today.

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

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