Weaker Yen and Australian Dollar

February 5, 2013

The U.S. currency rose overnight by 1.1% against the yen and 0.5% versus the Aussie dollar.  The greenback lost 0.3% to the euro, 0.2% to the loonie and 0.1% relative to the yuan and Swiss franc.  The buck is 0.1% firmer against the kiwi and sterling.  French President Hollande wants a coordinated regional exchange rate policy to be developed.  He’s concerned about the euro’s excessive strength.

Bank of Japan Governor Shirakawa, whose 5-year term doesn’t expire until April 8, will instead step down on March 19th at the end of the terms of his two deputy governors.

The Reserve Bank of Australia left the Official Cash Rate unchanged at 3.0% but released a dovish statement asserting that there is leeway to ease policy further.

Romania’s central bank also left its benchmark interest rate steady.  It’s been at a record low of 5.25% since a 25-basis point cut last March.  Reserve requirement ratios were also not changed.

Ten-year German bund and British gilt yields are five basis points higher.  Spain’s 10-year sovereign debt yield has climbed to a 6-week high amid the ongoing corruption scandal swirling around the ruling party.  The 10-year Japanese JGB yield dipped a basis point.

European share prices advanced in the wake of the release of service-sector purchasing manager surveys.  Equities rose by 1.8% in Spain, 1.3% in Italy, 1.2% in France, 0.7% in Britain, and 0.4% in Germany.  In the Pacific Rim, in contrast, stocks fell 2.3% in Hong Kong, 1.9% in Japan, 0.8% in South Korea, New Zealand, and Singapore, and 0.5% in Australia, India and Taiwan.

The price of WTI crude oil rose 0.8% to $96.98 per barrel, and that of gold is 0.2% firmer at $1678.90 per ounce.

A strong German PMI reading made a bigger impression on market psychology than weak French and other PMI figures.  The Ezone composite PMI was revised up to a 10-month high of 48.6 from a preliminary estimate of 48.2 and a December reading of 47.2.  Euroland’s service-sector PMI was also at a 10-month high of 48.6 versus December’s 47.8 reading.

  • The German service-sector PMI reading in January was 55.7, up from a flash estimate of 55.3 and readings of 52.0 in December, 49.7 in November and 48.4 in October.  55.7 also exceeds the long-term mean for this data series of 52.9 and was the best score in 19 months.  The German composite PMI for both manufacturing and services of 54.4 also constituted a 19-month high.
  • The French PMI readings of 42.7 on the composite index and 43.6 for services were each 46-month lows (that is since March 2009) and reflect broadening recession.
  • Italy had a 2-month composite PMI low of 45.4 in January.  The services PMI reading of 43.9 was down from 45.6 in December and at a 6-month trough.
  • In contrast, Spain’s 46.5 composite PMI reading and 47.0 services PMI score were 2.6 points and 2.7 points higher than in December and showed the slowest rates of contraction since August 2011.
  • The Irish services PMI in January of 56.8 was at a 65-month high, that is the strongest rate of expansion since August 2007, the month when the global financial crisis began as a U.S. subprime lending market rupture.  Ireland’s composite PMI reading was at a two-month high of 54.9.

The British service-sector PMI was two points better than forecast, swing back above the 50 no-change threshold to 51.5 in January from 48.9 in December.  This was the best score since 52.2 last September.  Sweden’s PMI report for services also beat expectations, climbing to 52.4 from 49.1 in December.

Australia’s service-sector PSI index was below 50 for a twelfth straight month, printing at 45.3 after 43.2 in December and 47.1 in November.

Japan’s composite PMI exceeded the 50 threshold for the first time since May 2012.  It was 50.4 versus 49.3 in December.  The service-sector Japanese PMI stayed at 51.5, which when reached in December represented a 9-month high.

Hong Kong’s private purchasing managers index rose 0.8 points to an 11-month high of 52.5. 

HSBC-compiled Chinese service and composite PMI scores both improved in January.  The service-sector reading, 54.0, was the best since last September, and the composite PMI of 53.5 was at a 2-year high.

Egypt’s PMI rose 7.9 points but stayed well under 50 at 45.0 in January, and there was a discernible acceleration of cost inflation.

The United Arab Emirates non-oil PMI was solid, albeit down 0.6 points from December at 55.0.

Russia posted above-50 PMI readings of 55.7 on services and 54.8 on the composite index.  Manufacturing has strengthened, whereas growth in services moderated.

Retail sales in Euroland fell 0.8% in December and was 3.4% lower than at the end of 2011.  Sales dropped 6.2% at an annualized rate between 3Q12 and 4Q12 and were already 0.6% lower in December than their average fourth-quarter level.

The Swiss trade surplus of CHF 1.03 billion in December was 64.5% narrower than in November, but 2012 as a whole saw the Swiss trade hit a record full-year surplus of CHF 24.4 billion.

Italian consumer prices rose 0.2% on month and 2.2% on year last month, which met analyst expectations.

Czech retail sales slumped 5.1% on year in December but fell by a smaller 0.4% adjusting for the variation in the number of working days in the month.

South African experienced a 24.9% jobless rate last quarter, slightly less than in 3Q12.

Indonesian GDP growth slowed to 6.2% in 2012 from 6.5% in 2011.  GDP last quarter was 6.1% greater than in the final quarter of 2011.  Filipino consumer price inflation ticked up to a 3-month high of 3.0% in January.  Producer prices in the Philippines were 3.6% lower in December than a year before.

Australian home prices were 2.1% higher last quarter than in 4Q11, and the Aussie trade deficit of A$ 427 million in December was the smallest since June.

Average hourly earnings in New Zealand slid 0.4% in 4Q and posted a 1.5% on-year advance. 

Scheduled U.S. data releases today feature the ISM purchasing managers index for non-manufacturers along with the NFIB small business sentiment index, the IBD/TIPP optimism index, and weekly chain store sales.

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

Tags: , ,


Comments are closed.