Focus on Algeria, China, Japan, and Britain
January 18, 2013
Algerian forces stormed the gas plant where foreign workers had been held hostage by militants, and some of the hostages were killed in the ensuing battle. Details are unclear at this time. This crisis caused British Prime Minister Cameron to postpone his speech on Britain’s relationship to the EU in the future. No make-up time has been announced.
China released many statistics including 4Q and full-2012 GDP, which posted respective advances of 7.9% and 7.8%. The data did not contain any major surprises.
The Bank of Japan Board meets Monday and Tuesday and reportedly will adopt a non-binding 2% inflation target and announce a further increase of quantitative stimulus in the range of JPY 10 trillion. The market rumor mill is in overdrive regarding what else may be unveiled.
Three key currency levels were breached temporarily overnight: 90 yen per dollar, 1.2500 Swiss francs per euro, and 120.0 yen per euro. The peaks occurred at 90.23, 1.2572 and 120.745. All three relationships are presently below the psychological thresholds.
British retail sales posted a worse-than-forecast 0.1% monthly volume drop last month. Their 12-month increase was cut to 0.3% from 0.9% in November. Sales dropped 0.6% between 3Q and 4Q and were just 0.6% higher in 4Q than in the final quarter of 2011.
The dollar on balance has climbed 0.7% against the kiwi, 0.5% versus the loonie, 0.4% relative to the Australian dollar, 0.3% against sterling and 0.1% versus the euro and Swiss franc. The greenback has dipped 0.1% against the yen and is steady versus the yuan.
There were several impressive rises overnight in Pacific Rim share prices, including gains of 2.9% in Japan, 1.7% in China, 1.5% in Taiwan and Indonesia, and 1.1% in the Philippines. Share prices also rose 0.5% in Singapore, 0.4% in India and 0.3% in Australia but declined 0.8% in New Zealand. In Europe, equities dipped 0.1% in Germany and 0.2% in Italy but have risen 0.5% in Britain and 0.2% in France and Spain.
The price of gold is unchanged at $1691.20 per ounce. West Texas Intermediate crude oil has edged 0.1% lower to $95.43 per barrel.
The 10-year German bund yield is a basis point lower, while the 10-year Japanese JGB inched a basis point higher.
The kiwi and New Zealand share prices reacted poorly to lower-than-expected quarterly consumer price data. The CPI dipped 0.2% from 3Q12 and posted an on-year increase of just 0.9%, half its advance in the previous year to 4Q11. Such news will keep New Zealand monetary policy in a very accommodative mode.
Chinese GDP growth of 7.8% last year constituted a 13-year low. GDP increased 2.0% sequentially last quarter and 7.9% from a year earlier. That broke a string of seven straight quarters of lower on-year growth from 9.8% in 4Q10 to 7.4% in 3Q12.
Chinese industrial production accelerated to a 10.3% on-year advance in December after 10.1% in November, 10.0% in October, 9.2% in September and 8.9% in August.
Chinese retail sales climbed 15.2% in the year to December. Like industrial output, that result was marginally better than analysts were anticipating. Sales had risen 14.9% in the year to November and 13.1% in the year to July.
Chinese fixed asset investment climbed 20.6% in 2012, down from an increase of 23.8% in 2011. Chinese home prices were unchanged on month in December. China’s business climate index printed 1.3% higher in 4Q than 3Q. The preliminary business sentiment gauge for January was also better than that covering December. The totality of today’s data from China depicts an economy that is slowly improving from last year’s slowdown.
Revised Japanese industrial production data showed a slightly smaller 1.4% monthly decline in November and a drop of 5.5% from a year earlier. Output in October-November was 2.5% lower than the 3Q level. In the year to November, capacity usage sank 5.6%, and capacity dropped by 2.1%.
Japanese stock and bond transactions last week generated a net JPY 174 billion capital outflow, a bit less than the outflow of JPY 223 billion in the week of January 4.
Italian industrial orders fell 0.5% in November and by 6.7% from a year earlier. Spanish industrial orders sank 1.5% on year in November. Portuguese producer price inflation eased to 3.6% last month from 3.8% in November. The Czech current account deficit narrowed sharply on month to CZK 2.0 billion from CZK 16.1 billion in October.
In North America, the U. Michigan preliminary index of consumer sentiment gets released today as does Canada’s monthly survey of manufacturing sales, orders, and inventories. The Bank of Mexico is holding an interest rate policy meeting and will announce its verdict late today.
Copyright 2013, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: Chinese GDP, dollar/yen, foreign exchange, Japanese industrial production
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