Yen Recovers over 1.0% after Official’s Comment

January 15, 2013

A wave of yen short-covering followed Economics Minister Amari’s warning against an excessive slide of the currency.

German GDP growth slowed to 0.7% last year, a shade less than analysts anticipated, from 3.0% in 2011 and 4.2% in 2010. 

The Fitch credit rating agency said a downgrade of the U.S. rating could be a consequence of any delay in raising the U.S. debt ceiling.

Bank Rossii left Russia’s refinancing rate unchanged at 8.25% as expected.

The dollar fell back 1.2% against the yen overnight but rose by 0.4% versus the Swiss franc, 0.3% against the euro, 0.2% relative to the loonie and sterling, and 0.1% against the Australian dollar.  The dollar has edged 0.1% lower against the kiwi and yuan.

Following Japan’s three-day holiday weekend, the Nikkei rose another 0.7%Chinese equities also climbed 0.7%, and those in India and New Zealand went up 0.4% each.  But stocks fell by 1.2% in South Korea, 0.8% in Taiwan, and 0.3% in Singapore.  In Europe, share prices are up 0.3% in Italy and 0.1% in France, unchanged in Britain, and down 0.5% in Spain and 0.2% in Germany.

The 10-year yields on German bunds and British gilts each slid a basis point, while the 10-year Japanese JGB yield dropped four basis points and is below 0.80% for the first time since January 3rd.

The price of gold advanced 0.7% to $1681.20 per ounce.  WTI oil prices are unchanged at $94.11 per barrel.

German personal consumption grew only 0.8% last year, about half as much as in 2011.  Business spending on machinery and equipment slumped 4.4%, that on construction contracted 1.1%, and inventories exerted a 0.5 percentage point drag on the GDP growth rate of 0.7% (0.9% when adjusted for working day variations).  Government spending advanced 1.0%, same as in 2011, and net exports augmented GDP growth by 1.1 percentage points.  Germany had a balanced budget, the first non-deficit since 2007.

It’s been reported that the German government is poised to revised projected 2013 economic growth to 0.4-0.5%, half as much as predicted previously.

German consumer prices rose 0.9% in December and recorded a 12-month increase of 2.1%, up from 1.9% in the year to November.  CPI inflation averaged 2.0% in 2012, a bit less than the 2.3% pace in 2011 but well above 1.1% in 2010 and 0.4% in 2009.

British consumer price inflation stayed at 2.7% for the third straight month in December.  Core consumer prices were 2.4% higher than in December 2011.  The Bank of England’s CPI target in the medium term is 2.0%.  Retail prices were 3.1% above the level at end-2011. 

British producer output prices dipped 0.1% on month but accelerated to a 2.2% 12-month increase from 2.1% in the year to November.  The core PPI-O inflation rate also ticked up a tenth percentage point, reaching 1.5%.  Producer input prices were just 0.3% higher than in December 2011.

The November ONS house price index, formerly compiled by the British Department of Communities and Local Government, was released, revealing a monthly increase of 0.5% and a larger on-year advance of 2.1% after 1.5% in October.  The house balance index of the Royal Institute of Chartered Surveyors improved more sharply than anticipated to a reading of zero in December from minus 9% in November.

Spanish CPI inflation remained at 2.9% in October.  Spain’s auctions of 12-month and 18-month sovereign debt produced significantly lower interest rates than seen at the previous auctions of those maturities.

Italian CPI inflation eased to 2.3% in December from 2.5% in November and remained at 2.6% on an EU-harmonized basis.  Danish PPI inflation subsided to 2.9% in December from 3.4% in November.  Czech producer price inflation slowed to 1.2% from 1.6% in November.  Hungarian CPI inflation rose to 5.0% in December from 4.5% the month before.

Dutch retail sales fell 4.0% in the year to November, which was more steeply than the 2.8% drop in the year to October.  The Dutch trade surplus of EUR 4.31 billion in November was 3.4% wider than in October.  Finland’s current account recorded a EUR 198 million surplus in November after a EUR 49 million deficit in October.  Norway’s NOK 35.5 billion trade surplus in December was 10.6% larger than its November surplus.

The euro area’s seasonally adjusted trade surplus widened from EUR 7.4 billion in October to EUR 11.0 billion in November, as imports declined 1.5% while exports rose 0.8%.  The year-to-date unadjusted balance was in surplus by EUR 75.5 billion compared to a deficit of EUR 23.7 billion over the first eleven months of 2011.  During January-November, exports were 8.3% greater than a year before, a gain that was over four times greater than the 2.0% increase of imports.

The Bank of Japan’s branch managers survey of regional economic conditions, analogous to the Fed’s Beige Book, reported deterioration between the third and fourth quarters of 2012 in eight of nine of the country’s regions.

Japanese M2 money grew 2.6% in the year to December, up from 2.1% in November and the quickest pace in eight months.  M3 and M1 rose by 2.2% and 3.3%, while broad liquidity was 1.1% greater than at end-2011, which is an acceleration from 0.3% in the year between 3Q11 and 3Q12.

Japanese machine tool orders plunged 27.5% in the year to December following a 21.3% drop posted in the year to November.

New Zealand food prices dropped 0.2% on month and 1.0% on year in December.  Such was the fourth consecutive monthly decline.

Turkey’s jobless rate slid to 9.3% in October from 9.4% in September.  Singapore retail sales were 1.1% lower than a year before in November, matching October’s drop.

Scheduled U.S. data releases today feature monthly retail sales and producer prices and include the Empire State manufacturing index, business inventories and weekly chain store sales.

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

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