New Lows for Yen & Sterling and Highs for Euro

January 25, 2013

Currencies hit new 2013 extremes overnight.  The yen fell as low as 91.03 per dollar and 122.315 per euro.  The euro touched a high of $1.3465, while sterling slipped as low as $1.5746.

On balance since the Thursday close, the dollar rose 0.6% against the yen, 0.2% versus the loonie, and 0.1% relative to the Australian dollar, but the greenback is down 0.5% against the euro and Swiss franc.  The kiwi, yuan, and sterling are unchanged on balance.

The Japanese Nikkei soared another 2.9%, but South Korea’s Kospi index fell 0.9% following disappointing earnings reported by Samsung.  In other markets around the Pacific Rim, share prices also gained 0.9% in Thailand and India, 0.8% in the Philippines, 0.5% in Australia, and 0.4% in Indonesia.  But stocks fell by 0.4% in China, 0.3% in Taiwan and 0.1% in Hong Kong.  The German Dax and Paris Cac rose by 1.2% and 0.6% in Europe, but the British Ftse is unchanged after weak U.K. GDP data.  Stocks are up 0.5% in Spain and 0.4% in Italy.

The ten-year German bund and British gilt yields are each five basis points firmer.  Their Japanese counterpart is down a basis point.

Oil prices are 0.5% higher on WTI crude at $96.42 per barrel.  The price of gold eased 0.2% to $1667.20 per ounce.

British GDP fell 0.3% last quarter or 1.2% at a seasonally adjusted annual rate.  On-year growth was zero in both the third and fourth quarters.  Output of production industries plunged 1.8% on quarter and by 2.4% on year in 4Q.

The U.K. November services index rose 0.6% on month but output for September-November was flat compared to the prior three months. 

The German business climate index compiled by the Ifo Economic Institute improved 1.8 points in January to a seven-month high of 104.2 and exceeded market expectations by over a point.  Current conditions increased 0.9 points to a two-month high, and expectations gained 2.5 points to an 8-month peak.  Manufacturing and construction showed very solid improvement, and IFO officials called the data on the whole a “promising start to the new year.”  The IFO services climate index printed at 15.4 in January, up from 14.1 in December and 8.5; while current conditions were a little worse, respondents were much more optimistic about the future.

EUR 137 billion of LTRO loads were repaid to the ECB, which was almost 40% greater than analysts anticipated.

Bank of Japan Board minutes from the December meeting showed some policymakers wanting lower short-term interest rates so that the yen might fall more.

Japanese Finance Minister Taro Aso denied the government was engaging in currency manipulation but rather just trying to end deflation.  The yen, he said, is merely correcting from excessive strength.

Japanese consumer prices rose 0.2% seasonally adjusted between November and December but were off 0.1% on year.  The CPI fell by 0.2% from December 2011 excluding fresh food and by 0.6% on year when both fresh food and energy are excluded.  Tokyo consumer prices in January were 0.6% lower than a year before overall and off 0.5% excluding fresh food. 

The Filipino trade deficit was 91% wider in November than October.  China’s MNI business sentiment index improved 3 points to a reading of 55.2 in January.  Singapore industrial output was 0.6% lower than a year earlier in December.

Hungarian retail sales sank 4.1% on year in November following a 3.7% drop the month before.  Greece posted a current account deficit of EUR 850 million in November.  The trade gap was EUR 890 million. Spanish producer price inflation edged 0.1 percentage point lower to 2.7% in December.

U.S, new home sales and Canadian consumer price data will be released today.

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

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