Russian Happenings

February 15, 2013

A large meteorite fell to earth in Chebarkul near the Ural Mountains, injuring about 300 people.

G20 central bank leaders and finance ministers meanwhile began the first session of a two-day meeting in Moscow.  Foreign exchange traders eagerly await the formal text that emerges. 

  • A Russian deputy finance minister said the statement will not single out Japan directly or express the term “currency wars.”
  • Bundesbank President Weidmann made some hawkish remarks:  the euro isn’t overvalued, Draghi did not mean to talk the currency lower at last week’s press conference, the ECB won’t reduce interest rates simply to combat euro strength, and the Ezone is heading for a gradual recovery.
  • ECB President Draghi reiterated that the euro is near its long-term average and that the ECB’s mandate is to prevent either inflation or deflation.

Dollar movements have been uneventful.  The U.S. currency has risen 0.2% against the euro, Swiss franc and kiwi and 0.1% versus the Australian and Canadian dollars.  The dollar has eased 0.2% against the yen and is unchanged relative to sterling and the yuan.  Chinese markets remained closed.

The most notable currency development involves the kiwi, which touched a high of $0.8535, its strongest level since September 2, 2011 and 14.5% stronger since last June 1st.

The ten-year British gilt yield has slipped three basis points.  Its German and Japanese counterparts are two basis points lower.

Japan’s Nikkei fell by 1.2%.  Equities dropped 1.0% in New Zealand and by 0.2% in India, Singapore, and Malaysia.  Stocks edged 0.1% lower in Australia.  In Europe, share prices are unchanged in Britain, up 0.1% in France, but down by 0.5% in Spain, 0.2% in Germany and 0.1% in Italy.

New Zealand retail sales posted a much stronger-than-forecast volume advance of 2.1% in the fourth quarter after dipping 0.3% in 3Q.  Sales were 2.9% higher than at the end of 2011.

Japanese stock and bond transactions last week generated a JPY 825 billion net capital inflow versus an inflow of JPY 878 billion in the previous week.

The increase in December of Japanese industrial production was revised marginally lower to 2.4%.  Output slid 0.3% in 2012 as a whole but fell in each of the last three quarters of the year and was 7.9% lower in December 2012 than December 2011.  Capacity utilization increased 2.9% in December but remained 7% below its year-earlier level.

The Bank of Japan monthly economic assessment was published.  As revealed yesterday, there was an upgraded view for a second straight month.  The economy and industrial production appear to have stopped weakening.  Prime Minister Abe is said to be close to announcing his nominees for the top Bank of Japan posts.  Muto, a former deputy governor and long-time official in the Ministry of Finance, is said to be the top contender to succeed Shirakawa as BOJ governor.  He’s said to be a bit less dovish than Iwata, who’s also been under strong consideration.  The BOJ Board has nine members, of which the top brass comprise a third of that body.

Singapore retail sales fell by a further 0.9% in December and were 1.5% weaker than at end-2011. 

British retail sales figures for January were disappointing.  In value terms, such slid 0.4% on month, and the volume of sales was down 0.6%.  The volume of sales in November-January was 0.8% below the level in August-October.

Euroland’s seasonally adjusted trade surplus widened from EUR 7.1 billion in October to EUR 10.5 billion in November and EUR 12.0 billion in December.  A surplus of EUR 81.8 billion in full-2012 compares to a deficit of EUR 15.7 billion in 2011 and embodied a 7.4% rise of exports versus a smaller 1.7% advance in imports.

Price data in Europe accentuated disinflationary forces.  Spanish consumer price inflation eased to 2.7% in January from 2.9% in December.  Greek harmonized consumer prices were unchanged on year last month.  Danish producer price inflation slowed to 1.6% from 2.9%.

Spain’s index of leading economic indicators jumped 1.0% in December even as the index of coincident economic indicators slipped by a further 0.3%.

Finland recorded a EUR 530 million current account deficit in December.  Capacity usage in Sweden fell to 84.5% last quarter from 86.8% in 3Q and 87.7% a year earlier in the biggest quarter-on-quarter slide since 2009.

Scheduled U.S. data today feature industrial production, the U. Michigan consumer confidence index, the Empire State manufacturing index, and Treasury Department-collected capital flows (TIC).  Canada reports existing home sales and the monthly survey of manufacturing sales, orders, and inventories.

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

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