Abe Government’s Yen Policy Criticized

January 28, 2013

Japan has drawn a wide range of foreign criticism from South Korea to the ECB for encouraging a weak yen.  Fresh lows of 91.27 per dollar and 122.94 per euro were touched overnight, but on balance Japan’s currency has edged up 0.1% against the U.S. currency from Friday’s closing level.  A risk exists that next month’s G20 meeting may label Japan a currency manipulator.

The dollar has risen 1.0% relative to the kiwi, 0.5% against sterling, 0.4% versus the loonie, 0.3% against the Australian dollar and 0.1% versus the euro.  The Swiss franc and Chines yuan are unchanged.

Share prices in the Pacific Rim advanced by 3.1% in China, 0.6% in Taiwan, 0.5% in Australia, 0.4% in Hong Kong and the Philippines, and 0.1% in New Zealand, Singapore, and Malaysia.  But stocks fell 0.9% in Japan and 0.4% in South Korea.  In Europe, equities have so far risen 0.5% in Italy but dipped 0.1% in Spain and Germany.  The Paris Cac and British Ftse are unchanged.

The 10-year JGB yields firmed three basis points to 0.75%, buoyed in part by the government’s fiscal 2013 projections of a 2.5% advance in GDP and positive CPI inflation of 0.5%.  Yields on 10-year British gilts and German bunds are each up a basis point.

The price of West Intermediate oil is unchanged at $85.88 per barrel.  Gold has eased 0.2% to $1655.80 per ounce.

M3 money growth in the euro area subsided in December, posting a 12-month increase of 3.3%, down from 3.8% in the year to November.  M3 rose 3.7% on year in the fourth quarter, up from 2.0% in 4Q11 and 1.6% in 4Q10.  It was the strongest 4Q-over-4Q increase since 7.9% between 4Q07 and 4Q08.  M3 had dropped 0.3% between 4Q08 and 4Q09.  Loans to the private sector were 0.7% lower in December than a year earlier.  Mortgage lending rose 1.3%, but loans to non-financial companies dropped by 2.3%.

Euroland’s index of leading economic indicators increased 0.4% last month, but the index of coincident indicators edged 0.1% lower.

Japanese corporate service prices rose 0.2% on month in December but fell by 0.4% on year.  The CSP declined 0.3% on average in 2012 after drops of 0.7% in 2011 and 1.3% in 2010.

In China, industrial profits advanced by 5.3% in 2012.  Taiwan’s index of leading economic indicators increased 0.9% last month, while the index of coincident indicators slipped 0.1%.  South Korea’s consumer confidence reading of 102 in January was three points better than December’s score and at the highest level since May 2012. 

New Zealand’s performance of services index weakened for a seventh straight time, dropping by 2.7 points to a December reading of 51.5.

Australian market were closed today in observance of Australia Day, which commemorates the arrival in 1788 of the first British fleet to the east coast of the country.

The 84.6 reading for Italian consumer confidence in January constituted the lowest such level since at least the beginning of 1996 and was 1.1 points below December’s level.  Italian wages were 1.7% greater in December than a year earlier.

Britain’s Hometrack house price index stagnated on month in January and posted the same 0.3% on-year dip as in December.

Irish retail sales volume slid 0.1% on month in December and 1.0% on year.  Auto sales were particularly weak, and the overall data were worse than forecast.

Sweden posted trade surpluses of SEK 0.7 billion and SEK 69.9 billion in December and 2012, respectively, following SEK 3.2 billion in November and SEK 67.4 billion in 2011.  Swedish retail sales increased 1.2% last month and 2.5% from December 2011, quickening from November’s results.  Swedish household loans were 4.5% greater in December than a year before.  Such had risen 5.2% in the year to December 2011.

Central banks in Israel and Colombia are holding interest rate policy meetings today.

Scheduled U.S. data releases today feature durable goods orders, pending home sales, and the Dallas Federal Reserve manufacturing index.

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

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