Weaker Yen

November 21, 2012

The yen fell 0.8% against the dollar to another multi-month low following the release of dismal Japanese trade figures.

The U.S. Treasury market will shut early for Thanksgiving.  Many U.S. workers will take an extra day off on Friday.

The dollar otherwise is unchanged against the euro, Swissie, yuan and loonie.  The greenback is 0.4% and 0.3% higher against the New Zealand and Australian dollars and 0.1% softer versus sterling.

Share prices climbed 1.4% in Hong Kong and China, 0.9% in Japan, and 0.7% in India.  Equities fell 0.8% in Taiwan, 0.4% in Australia and 0.3% in South Korea.  In Europe, stocks are higher by 0.8% in Italy, 0.5% in Spain, 0.3% in France, and 0.1% in Germany and Britain.  The Dow Jones Industrials is 0.2% firmer.

Ten-year German bund and British gilt yields edged a basis point higher, and 10-year Treasury yields are up by 2 bps.  The JGB yield is steady.

Oil prices advanced 1.0% to $87.59 per barrel.  Gold prices firmed 0.2% to $1726.10 per ounce.

Investors haven’t panicked following yesterday’s incomplete attempt by EU finance ministers to forge a package on Greece that needs to be done before the next troika aid installment can be made.  Officials will meet again on November 26 to work out details mostly related to the length of time that Greece is to receive aid.

Japan’s JPY 624 billion seasonally adjusted trade deficit in October was the 19th in a row and exceeded its expected size.  Imports were 7.8% lower than in September.  The unadjusted trade deficit of JPY 549 billion compares with a deficit of JPY 283 billion in October 2011.  Exports and imports dropped 6.5% and 1.6% from a year earlier.  Exports to China tumbled 11.6%.  Those to the EU were 20.1% lower.

There were no big surprises in the published minutes from the Bank of England’s November 7-8 monetary policy meeting.  The vote was unanimous to keep a 0.5% bank rate, but there was a single dissent, again cast by David Miles, favoring a GBP 25 billion increase in the asset purchase program.  The 8-person majority voted for no change in the current size of GBP 375 billion but didn’t explicitly rule out the possibility of more quantitative easing down the road.  British inflation is higher than desired and still above target, while growth prospects are poor.

U.S. jobless insurance claims continue to be distorted by the impact of Hurricane Sandy.  Such fell 41K to 410K last week, but their four-week average went up to 396.25K from 386.75K in the week of November 10.  U.S. mortgage applications fell 2.2% last week following a large jump in the prior week.  The 30-year fixed-rate mortgage rate ticked two basis points higher to 3.54%. 

The revised November U. Michigan/Reuters index of consumer sentiment was disappointing, falling back to a reading of 82.7 from a preliminary estimate of 84.9.  Compared to October’s score of 82.6, the net increase was just 0.1 percentage point.  The Conference Boards U.S. index of leading economic indicators went up just 0.2% in October, while the rise of 0.1% in the coincident index was even smaller.  Both results were weaker than seen in September.

Contrary to the above soft data, Markit Media’s preliminary U.S. manufacturing purchasing managers index jumped 1.4 points to a five-month peak in November of 52.4.  The gain was powered by increases of 1.5 points in the production sub-index and 1.7 points in new orders.  Input price inflation jumped to a score of 63.6, up from 57.1 in October and its highest point in eight months.

Germany’s index of leading economic indicators rose 0.1% in September after showing no change in August.  The German coincident index slipped 0.2%.

China’s index of leading economic indicators accelerated with a 1.5% advance in October versus a 0.2% rise the month before.  The Chinese coincident index also posted a sharp 1.3% gain.

According to the Westpac index, Australia’s index of leading economic indicators increased 0.7% in September to a four-month high.

Britain’s public sector net borrowing last month totaled GBP 6.5 billion, while the public sector net cash requirement of GBP 14.7 billion was considerably bigger.

Spain’s trade deficit of EUR 3.09 billion in October was similar to the size of the September shortfall.  Swiss on-year M3 money growth edged down to 8.6% in October from 8.8% in September.

Icelandic wage costs ticked 0.1% higher in October but slowed to a 12-month pace of 5.1%.

Wholesale turnover in Singapore slumped 5.2% on quarter in 3Q12 and was 5.4% lower than a year earlier.

Malaysian unemployment climbed 0.5 percentage points to 3.3% in September.  The Norwegian jobless rate in September was 3.0%.

South African consumer price inflation edged up to 5.6% in October from 5.5% in September. 

Copyright 2012, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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