Japanese Satisfaction Evident with a Weakening Yen
December 20, 2016
The yen fell 0.8% against the dollar after the Bank of Japan left its accommodative monetary stance unchanged despite a sharply lower yen. Governor Kuroda dispelled any thought of a possible rate hike, noting that depreciation lifts import prices, overall inflation, growth and expected inflation.
The dollar also advanced 0.5% against the pound, 0.3% versus the euro and Australian dollar, 0.2% vis-a-vis the kiwi, Swissie and Mexican peso but slipped 0.2% against the loonie and 0.1% relative to the yuan.
Despite an act of terror in Berlin yesterday, share prices are up in Europe. Japan’s Nikkei rose 0.5%, and the DOW shows a similar gain. Gold slumped 1.2% to $1,129.5 per ounce. West Texas Intermediate crude oil advanced 0.8% to $52.54 per barrel.
Ten-year sovereign debt yields are mostly higher, with gains of 5 basis points in U.S. Treasuries, 4 bps in Canada, 0.3 bps in the U.K., and 2 bps in Germany. The 10-year Japanese JGB slipped two basis points in response to unchanged BOJ policy.
Central banks in Hungary and Turkey also left key interest rates unchanged. Hungary’s rate had been lowered by 15 basis points each in March, April and May but has stayed at a lowly 0.90% since then. The Turkish one-week repo rate was lifted 50 bps in November to 8.0% along with a 25-basis point increase of the marginal funding rate to 8.5% at that time. But officials at Turkey’s central bank acknowledge a rise in upside inflation risks caused by higher oil prices and increased global uncertainty.
Published minutes from this month’s Australian monetary policy meeting expressed concern about the Aussie dollar being too strong and exhibited an inclination to keep interest rates steady.
German PPI inflation moved above zero for the first time since mid-2014. The PPI rose 0.3% on month and 0.1% on year in November. Energy fell by a lessening 1.7% on year, but all other producer prices were collectively 0.8% higher.
Euroland recorded a seasonally adjusted EUR 28.4 billion current account surplus in October, a two-month high. The unadjusted surplus was EUR 32.8 billion.
The CBI index of British distributive service sector activity increased 9 points to a reading of 35 in December. Such was at minus 8 just 3 months earlier.
The Swiss trade surplus in November amounted to CHF 3.64 billion versus CHF 2.66 billion the month before. Export and import volumes were 3.7% and 6.1% weaker than a year earlier.
Swedish consumer sentiment fell 2.6 points to a reading of 103.2 in December, which is a 3-month low.
Dutch consumer sentiment remained at a reading of +12 for a third straight month in December.
Italy posted a EUR 6.08 billion current account surplus in October, 38% bigger than a year earlier. The surplus over the past year has averaged 2.7% of Italian GDP.
In October, the indices of leading economic indicators rose 0.7% in South Africa and 1.0% in Mexico but fell 0.4% in Australia.
In the year to November, Japanese department store sales dropped 2.4%, while South Korean producer prices increased 0.7%. Consumer prices in Hong Kong rose 1.2%, same as the pace in October. New Zealand food prices rose 0.6% in the year to November, its fourth positive on-year change in a row.
Members of the Electoral College endorsed Donald Trump to be the 45th president of the United States.
Copyright 2016, Larry Greenberg. All rights reserved. No secondary distribution without express permission.