Dollar Down, Stocks Up, and Japan Closed

November 23, 2012

Continuing optimism about the resolution of Euroland’s debt crisis and U.S. fiscal cliff talks depressed the dollar by 0.6% against the kiwi, 0.5% relative to the euro, 0.4% versus the Swissie and Australian dollar, 0.3% against sterling, 0.2% versus the yen and 0.1% against the loonie.

Taiwan led a rally in Asian stock markets with a jump of 3.1% on new government stock regulations.  On-year Taiwanese industrial production growth improved to 4.6% in October from 3.0% in September.  Share prices climbed 0.8% in Hong Kong, 0.7% in the Philippines and China, and 0.6% in South Korea. 

Stocks in Europe have risen 0.6% in Germany, 0.5% in France, 0.4% in Britain and Italy, but just 0.1% in Spain where S&P downgraded the rating of the banks.  U.S. stocks have opened on an up-note following the Thanksgiving Day Holiday.  Many U.S. workers are off today on this huge holiday shopping season kick-off.

The Japanese market is closed for Labor ThanksgivingShinzo Abe, leader of the LDP, said forex intervention often doesn’t work and that the Bank of Japan law wouldn’t need to change if the central bank Board adopted a 2% inflation target. 

The 10-year German bund yield edged a basis point higher.  The British gilt yield is steady.

Gold prices are 0.3% firmer at $1734.00 per ounce.  Oil rose 0.2% to $87.55 per barrel.

The mood of investors was helped by some reassuring data from Europe.

  • Revised German GDP figures confirmed positive growth in 3Q12.  GDP climbed 0.2% from 2Q and 0.9% from a year earlier adjusted for working day variations.  Net exports enhanced GDP by 0.3 percentage points on quarter and 1.4 percentage points on year.  Personal consumption rose 0.3%, and government spending grew 0.4%.  Machinery and equipment investment spending fell by 2.0%, and inventories exerted a 0.3 percentage point drag on GDP growth.
  • The IFO business climate index for Germany recovered 1.4 points to a reading of 101.4 in November, breaking a string of six straight declines.  Current conditions and expectations each advanced.  IFO officials said the data show the economy holding up in the face of a regional crisis.
  • French business sentiment rose to a reading of 88 in November according to the INSEE statistical agency from 85 in October but remained below the September reading of 90.  S&P affirmed its AA+ French rating but associated such with a negative outlook.
  • Italian retail sales rose 0.2% in September.  There was a 1.7% on-year decline, nonetheless.
  • Belgian business sentiment improved 0.1 points to minus 13.4 in November.
  • The number of U.K. mortgage approvals according to the British Bankers Association surpassed expectations in October, rising to 33,039 from 31.5K the month before.
  • ECB President Draghi has spoken of reduced anxiety about a euro area breakup.

Canadian consumer prices rose 0.3% last month on a seasonally adjusted basis but retained a low 1.2% 12-month increase.  Core inflation remained at 1.3%, which is significantly below target.  Gasoline prices dropped 1.2% on month.

Mexico had a 4.8% unemployment rate last month and a $3.66 billion current account deficit in the third quarter.

CPI inflation in Singapore slowed to 4.0% in October from 4.7% in September.  Singapore’s current account surplus widened 10% last quarter.

Spanish producer output price inflation eased to 3.5% last month from 3.8% in September.

Malaysian CPI inflation held steady at 1.3% in October.

New construction orders in Germany were 3.8% weaker than a year earlier in September.  Austrian industrial production recorded a smaller 2.5% 12-month increase in September.

A cease-fire is being observed in Gaza.

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

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