Volatile Currency Movements Overnight

January 17, 2013

The U.S. dollar has risen 1.1% versus the yen but declined 1.0% against the kiwi.  The buck advanced 0.5% against the Aussie dollar but dropped 0.6% against the euro.  The dollar also has eased 0.2% vis-a-vis sterling and 0.1% against the Swiss franc.  The Swissie is trading weakly against the euro at 1.2439, almost five centimes from the Swiss National Bank’s allowable ceiling of 1.2000 per euro.  The yuan is steady.

The recent deluge of official remarks about currency values has traders confused about true currency policy intentions.  Japan’s Economic Minister Amari claimed that earlier remarks of his about the yen were misinterpreted by reporters.  This reprises an old tactic of saying one thing, getting markets to react, and then denying the translation of what was said initially. 

Share prices fell 1.1% in Taiwan and 0.9% in China but rose 0.7% in India and New Zealand, 0.4% in the Philippines and Australia and 0.1% in Japan.  In Europe, stocks are up 0.5% in Italy, 0.4% in France, and 0.3% in Spain, but the German Dax and British Ftse show dips of 0.3% and 0.1%, respectively.

The yields on ten-year German bunds and British gilts are each four basis points higher, while that on 10-year Japanese JGBs slid another basis point and is below 0.75%.

The price of West Intermediate crude oil has firmed 0.3% to $94.49 per barrel.  Gold edged 0.1% lower to $1681.30 per ounce.

Brazil’s central bank held its 7.25% Selic Rate unchanged.  See my review.  Monetary officials in Sri Lanka also left key interest rates unchanged as expected.  Chile’s central bank is scheduled to make its first interest rate announcement of 2013 late today.

Australian December labor statistics were worse than predicted and have generated some speculation that the RBA will ease monetary policy further.  Jobs fell by 5.5K, their first decline since August, but the gain in November was revised higher to 17.1K.  Australia’s unemployment rate ticked up a tenth of a percentage point to 5.4%, while the labor participation rate held steady again at 65.1%.  In a separate Australian data release, expected inflation over the next year accelerated to 2.0% this month from 1.8% in December.

Japan’s tertiary index of service sector activity fell 0.3% in November and to a 12-month increase of 1.1% from 1.3% in the year to November.  Japanese department store sales were 1.3% lower in December than a year earlier.

Fourth-quarter GDP heads a slate of Chinese economic indicators to be released Friday.  Analysts expect a string of seven consecutive quarters of lower on-year growth to be broken.

Elsewhere in the Pacific Rim, South Korean producer prices in December recorded their largest 12-month decline (1.2%) since October 2009. Filipino on-year M3 money growth accelerated in November to 9.8% from 8.6% in October.  Non-oil domestic Singapore exports plunged to 16.3% below their year-earlier level last month.  Hong Kong’s jobless rate settled back to 3.3% last month from 3.4% in November.  New Zealand job ads increased for the first time since last February, advancing 0.4% in December, and the economy’s consumer confidence rose 3.1% this month.

Construction output in the euro area dropped 0.4% in November and by 4.7% from a year earlier.  Construction in October-November was 1.1% lower than its average third-quarter level.

Spain’s government engineered more successful sovereign debt auctions at a variety of maturities.  The Spanish index of leading economic indicators recovered another 0.5% in November.  Icelandic CPI inflation slowed 0.9 percentage points to 5.1% in December.  Irish harmonized CPI inflation ticked upward to 1.7% in December from 1.6% in November. 

The Swiss PPI/import price index edged 0.1% higher last month and was 1.0% above its end-2011 level.  In the year to December, domestic producer prices climbed 1.3%, while import prices edged up only 0.1%.  Dutch unemployment rose to 7.2% last month from 7.0% in November.

South African wholesale turnover dropped 0.6% on month in November, reversing a 0.5% increase in October.  Their 12-month rate of increase slowed to 6.7% from 8.9%. 

Scheduled U.S. economic data today include housing starts, building permits, the Philly Fed manufacturing index, and weekly jobless insurance claims.  Lockhart of the Federal Reserve speaks publicly. Canadian securities transactions arrive, too.

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

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