More Comments from Officials about Foreign Exchange Values

January 16, 2013

Outgoing EU President Jean-Claude Juncker complained that the euro’s rise posed risks to the Ezone economy.

ECB Council member Nowotny said central bank officials aren’t worried about the stronger euro.

Japanese Chief Cabinet Secretary Suga said the yen is correcting from previous strength and that officials are not purposely trying to resist the correction.

Investors await lots of U.S. data releases on tap today: consumer prices, industrial production, the National Association of Home Builders index, TIC data on U.S. capital flows with other countries, and the Fed’s Beige Book of regional economic trends.

The dollar declined 0.7% against the yen, 0.2% versus the Swiss franc, and 0.1% relative to the euro.  The U.S. currency is 0.2% higher against sterling and up 0.1% vis-a-vis the yuan, Australian dollar and Canada’s loonie.  The kiwi is unchanged.

Japan’s Nikkei, which had been on a one-way uptrend, slumped 2.6%, and most other bourses are weaker, too.  Share prices fell 0.9% in India, 0.8% in Taiwan, 0.7% in China and 0.3% in South Korea.  European stocks have lost 1.2% in Italy, 0.4% in Britain and Spain, 0.2% in Germany, and 0.1% in France.

The ten-year German bund yield has increased six basis points, while the Japanese JGB of that same maturity has fallen by three bps.  The 10-year British gilt yield is a basis point softer.

The price of gold slipped 0.3% to $1678.70 per ounce, and the price of WTI crude oil is 0.3% higher at $93.57 per barrel.

The World Bank unveiled the following revised real growth projections for 2013-2015.

GDP, % 2013 2014 2015
World 2.1% 3.1% 3.3%
OECD 1.1% 2.0% 2.3%
U.S. 1.9% 2.8% 3.0%
Ezone -0.1% 0.9% 1.4%
Japan 0.8% 1.2% 1.5%
All Developing 5.5% 5.7% 5.8%
China 8.4% 8.0% 7.9%
India 6.1% 6.8% 7.0%


Core Japanese domestic machinery orders advanced 3.9% in November on top of a 2.6% revival in October but were just 0.3% higher than in November 2011.  Foreign demand for machinery orders soared 17% in November but remained 9.6% lower than a year before.

Japanese domestic corporate goods prices increased 0.3% in December but remained 0.6% lower than at end-2011.  Export prices and import prices respectively fell by 0.8% and 2.1% between December 2011 and December 2012.

Japanese consumer sentiment slid 0.2 points further to a reading of 39.2 in December, lowest in a year.

Chinese foreign direct investment sagged more than anticipated in December and recorded a 4.5% on-year drop in full December after falling by 3.6% over the first eleven months of the year.

Australian motor vehicle sales rose 2.2% last month, a 3-month high, and by 17.9% from end-2011.  The Westpac gauge of Australian consumer confidence rose 0.6% this month after plunging 4.1% in December.

Final Ezone consumer price figures for December showed an upwardly revised 0.4% monthly rise.  The 12-month 2.2% rate of increase was the same as in November but down from 2.7% in the year to December 2011.  CPI inflation averaged 2.5% in 2012.  Core inflation was 1.5% in both December and 2012 as a whole.  Energy prices increased 5.2% in the year to December, while all other consumer prices collectively went up 1.8%. 

New car sales in the 27-nation EU were 16.3% lower in December than a year earlier.

Swiss retail sales rose 0.2% in November after dropping 0.8% in October and were 2.9% higher than in November 2011.

Italy’s trade surplus narrowed 2.4% sequentially to EUR 2.363 billion in November.  Ireland’s trade surplus widened a billion euros to EUR 4.28 billion in November.  Austrian CPI inflation held steady at 2.8% last month.  Hungary’s industrial production edged down 0.1% in November and was 6.9% lower than a year before.

Turkish consumer sentiment printed at 89.0 in December, 0.2 points lower than in November.

South Africa’s manufacturing purchasing managers index fell back to a 2-month low of 47.4 in December from 49.5 in November.  South African retail sales increased 0.9% on month and 3.4% on year in November.

Brazilian monetary policymakers are holding their first meeting of 2013 to decide the level of their Selic Rate.  The World Bank forecasts Brazilian GDP will expand by 3.4% this year, then 4.1% in 2014 and 4.0% in 2015.

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

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