Softer Yen and Dollar ahead of ECB Monthly Press Conference

January 10, 2013

The yen lost 0.4% against the dollar on continuing expectations of more expansionary fiscal and monetary policies in Japan.

The dollar otherwise had declined 0.6% versus the Australian dollar, 0.5% relative to the kiwi, 0.3% vis-a-vis the euro and Swissie, and 0.2% against the loonie and sterling.

The Bank of England as expected left policy unchanged this month.  The bank rate stays at 0.5%, and the asset purchase program ceiling remains GBP 375 billion.

The ECB decision is less certain.  Most analysts expect no new stimulus, but there are a few dissenters from that view.

Equities have climbed 0.9% in Taiwan, 0.8% in South Korea, 0.7% in Japan, 0.6% in Hong Kong, 0.4% in New Zealand, 0.3% in Australia and 0.2% in China.  But Indonesia’s market fell 1.0%.  In Europe, the German Dax is 0.2% firmer, and share prices in Italy have risen 0.5%.  But the Paris Cac is off 0.2%, and Spain’s IBEX is flat.

Oil has jumped 1.6% to an attention-grabbing $94.56 per barrel.  Gold climbed 0.5% to $1663.90 per ounce.

Ten-year British gilt yields have risen three basis points.  Their German bund counterpart is two bps firmer.  Spain’s 10-year bond yield slid below 5% for the first time since last March.

China reported a larger-than-expected trade surplus for December but weaker-than-forecast money and credit growth.  The trade surplus of $31.6 billion was the most since $32 billion in October June and followed a $19.3 billion surplus in November.  On-year export growth of 14.1% was the most since 15.3% in the year to May 2012.  Import growth of 6.0% was the most since 6.3% last June. Bank lending sank to 454 billion yuan from 523 billion yuan in November.  M2 growth slowed for a third straight month, printing at 13.8%.  M0 also slowed to 7.7% from 10.7% in November, but M1 growth accelerated to 6.5% from 5.5%.

Chinese international reserves advanced to $3.31 trillion at the end of 2012 from $3.29 trillion three months earlier.

Japanese reserves dropped $2.72 billion in December to $1.268 trillion and were $27.7 billion lower than at end-2011.

Japanese stock and bond transactions last week generated a JPY 568.5 billion net capital inflow versus a JPY 1.274 trillion outflow in the final week of 2012.

Japan’s index of leading economic indicators fell by 0.9 points in November to a 91.9 reading.  The coincident index also slipped, reaching 90.1 after 90.7 in November.

Bank Indonesia as expected left its key overnight rate at 5.75%, the level since a cut of 25 basis points last February.

New Zealand posted a NZD 700 million trade deficit in November, modestly narrower than in October.

Australian building permits increased 2.8% in November but recorded a smaller 13.2% on-year advance after increasing 19.2% in the year to October.

The Bank of France’s business sentiment index improved four points to a score of 95 in December, persuading central bank officials to retain their prior projected 0.1% GDP dip in 4Q.  French industrial production rose 0.5% in November, significantly more than expected, and posted a 3.6% 12-month decline.  Factory output fell 4.6% from November 2011.  French harmonized consumer price inflation ticked down a tenth point to a 34-month low of 1.5%..

Greek unemployment increased to another record high in October, 26.8%, from 26.2% the month before.  But Greek CPI inflation of just 0.8% in October constitutes a 39-month low.

Swedish industrial production posted a 1.3% monthly decline in November and was 4.3% lower than a year earlier. Finnish industrial output dropped 0.5% on month and by 1.9% on year in November.  Danish CPI inflation eased 0.2 percentage points (ppts) to 2.0% in December.  Dutch inflation picked up 0.1 ppt to 2.9% and reached 3.4% on a harmonized basis. Norwegian consumer price inflation of 1.4% last month was up from 1.1% in November, but producer prices were unchanged on month and down 0.2% on year.

Factory output in South Africa was 3.4% greater in November than a year before.

Brazilian CPI inflation rose to 5.8% in December from November’s 5.5% reading.

Scheduled U.S. data today include wholesale inventories and weekly jobless insurance claims.  Canada reports on new house prices and building permits.  Peru will be announcing its monthly monetary policy decision.  Bullard and George of the Federal Reserve speak publicly today.

Copyright 2013, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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