German and Japanese Current Account Data and a Bank of England Decision

October 8, 2015

The dollar fell overnight by 0.5% against the Swiss franc, 0.4% versus the euro, 0.3% vis-a-vis the loonie and 0.1% relative to the yen, yuan and kiwi.  The greenback firmed 0.2% against the Aussie dollar.

Share prices in the Pacific Rim rose 3.0% in China, whose market had been shut previously, and 0.7% in South Korea, but declines were recorded elsewhere of 1.0% in Japan, 0.7% in India, 1.3% in Hong Kong, 0.6% in Taiwan and 0.5% in Singapore and New Zealand.  There have also been declines in Europe thus far of 1.5% in Greece, 0.5% in Spain and 0.1% in Great Britain and France.  The German Dax is steady, and Italy’s market has risen 0.5%.

Ten-year sovereign debt yields fell by three basis points in the U.K., two bps in Germany and a basis point in Japan.

Comex gold is steady at $1.145.11 per ounce.  West Texas Intermediate crude oil edged up 0.2% to $47.90 per barrel.

Japan’s JPY 1.653 trillion current account surplus in August was somewhat larger than anticipated and 6.6 times greater than the August 2014 surplus.  Merchandise exports rose 3.6% on year, while imports slumped 4.9%.  The current account plus portfolio and direct investment generated a JPY 8.125 trillion inflow in the month.  In seasonally adjusted terms, the current account surplus widened 20.3% on month to JPY 1.59 trillion.  Stock and bond transactions in September generated a JPY 8.225 trillion outflow.  Last week, which bridged the third and fourth quarters, generated a JPY 5.023 trillion inflow following a JPY 2.32 trillion outflow in the prior week.

The Japanese customs clearance trade balance in September 1-20 showed a tiny surplus of JPY 48 billion versus a JPY 771 billion deficit a year earlier, as exports advanced 5.1% and imports plunged 11.9% on year.

The German current account surplus in August of EUR 12.3 billion was seasonally low but still larger than the August 2014 surplus of EUR 11.1 billion.  The EUR 15.3 billion trade surplus was less than forecast but, like the current account, larger than its year-earlier level of EUR 13.9 billion.  The seasonally adjusted trade surplus printed at EUR 19.5 billion, producing a July-August average of EUR 21 billion, somewhat lower than the 2Q monthly average of EUR 22.4 billion.  Exports (-5.2%) and imports (-3.1%) each fell sharply on month in August.

The Bank of England Monetary Policy Committee again voted 8-1 to leave the Bank Rate at 0.5%, its level since March 2009, and unanimously to retain a GBP 375 billion limit on its Asset Purchase Program.  This was the expected outcome.  The majority observed zero CPI inflation, core inflation of around 1%, continuing spare capacity, a flattening out of unemployment, and international risks.  Once rate normalization begins, the majority anticipates it will be a gradual process but does not guarantee that promise.  Rates will be guided ultimately by the evolution of data and other pertinent information.  Ian McCafferty again dissented in favor of a 25-basis point interest rate hike, asserting that rising domestic cost pressures outweighing the disinflationary effect of the strengthening exchange rate and leading ultimately to an overshoot of the 2% inflation target in the medium term.

Japan’s economy watchers index, which reflects the perception of service-sector workers like cab drivers, fell 1.8 points to an 8-month low of 47.5.  Such had been as high as 53.6 back in April.  Japanese bankruptcies were 18.6% lower than a year earlier in September.

Indonesian on-year growth in retail sales of 5.4% in August after 8.5% in July was the smallest pace so far this year.  Thai consumer confidence printed at 72.1 last month, down further from 72.3 in August.

Eurozone house price inflation accelerated to 1.1% in the second quarter from 0.7% in 1Q, 0.4% in the final quarter of 2014 and 0.2% in the third quarter of last year.

The Bank of France’s business sentiment index fell to a 6-month low of 97 in September from 98 in the prior three months.  France’s central bank now expects only a 0.2% rise in real GDP last quarter.

Greek unemployment in July of 25.0% was the same as in June but down from the 26.3% year-earlier level.  Czech unemployment fell to 6.0% in September, a 76-month low.  Swiss seasonally adjusted unemployment edged up 0.1 percentage point to 3.4% in September.

In the year to September, consumer prices fell 0.3% in Ireland, rose 0.6% in The Netherlands, and dropped 0.4% in Hungary.

Britain’s Royal Institute of Chartered Surveyors reported an unexpected drop in its house price balance measure to 44% in September from 53.0% in August.  The NIESR’s estimate of U.K. GDP growth was 0.5% for the three months through September, which was the same as its estimate for June-August.

In August, Greece posted a EUR 660 million trade deficit, and Finland’s deficit amounted to EUR 160 million. 

Fed policy will be much in today’s news as the central bank is releasing minutes of its September meeting, and Williams, Kocherlakota and Bullard — presidents of the San Francisco, Minneapolis and St. Louis Feds — speak publicly.  U.S. weekly jobless insurance claims will be reported by the Labor Department, and Canada releases housing startsMexican CPI and PPI data arrive, too.

Copyright 2015, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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