Yen Weaker after G20 Statement’s Release

February 18, 2013

A statement from G20 finance ministers and central bank governors did not single out Japan.  Officials said competitive currency devaluations should be avoided by allowed domestic macroeconomic stimulus to promote growth and counter inflation that is too low are negative.  The yen fell to overnight lows of 94.23/USD and 125.93/EUR.

China has reopened after the week-long Lunar New Year holiday.  Retail activity during the week was reportedly the weakest for this festive week since 2009.  The yuan is 0.2% softer against the dollar, and Chinese stocks closed lower in this first post-holiday session.

The U.S. and Canadian markets are closed today for President’s Day and Family Day.

The dollar on balance has risen 0.4% against the yen, 0.3% versus sterling, 0.2% relative to the yuan and Swiss franc and 0.1% against the euro.  The loonie, kiwi, and Aussie dollar are unchanged against their U.S. counterpart.

The Japanese Nikkei rallied 2.1% to 11,408.  S&P reaffirmed the AA- rating on long-term Japanese sovereign debt.  Equities rose 0.7% in the Philippines, 0.6% in Australia, 0.5% in Taiwan, and 0.4% in New Zealand.  The Shanghai Composite index fell 0.4%, and stocks dropped 0.3% in Hong Kong. 

Ezone peripheral markets are worse.  Stocks fell by 1.0% in Spain and 0.8% in Italy where parliamentary elections are scheduled for February 24-25.  The German Dax and British Ftse edged 0.1% lower, and the Paris Cac has lost 0.3% so far.

Spanish and Italian 10-year sovereign debt yields are seven basis points higher.  The 10-year German bund yield, in contrast, has slipped three basis points, and the 10-year British gilt is off two bps.  The 10-year Japanese JGB is a basis point lower at 0.75%.

Oil has slipped 0.3% to $95.59 per barrel.  Gold, which had negative weekend press, is 0.1% firmer at $1610.30 per ounce.

Japanese Prime Minister Abe again warned of the possibility of a change in BOJ law if inflation fails to climb to 2%.  No time limit for that was mentioned.  Abe’s selection of the new BOJ leadership team is considered likely this week.  Japanese machine tool orders in January were revised to show an on-year decline of 26.4% from a preliminary reported drop of 26.1%.  Such fell 27.5% in the year to December 2012.

ECB President Draghi will be testifying today before the EU parliament.  Many expect his remarks to be dovish in tone, with a possible hint that interest rates could be lowered if recovery doesn’t emerge or if inflation tracks below the ECB’s expectations.

Euroland posted a greater-than-anticipated EUR 13.9 billion current account surplus in December.  The fourth-quarter surplus equaled EUR 37.8 billion, and the 2012 unadjusted surplus of EUR 110.8 billion was substantially wider than the surplus of EUR 12.5 billion in 2011.  The Basic Balance (current account plus long-term net capital flows) showed an inflow of EUR 124.0 billion last year versus a surplus of EUR 131.7 billion in 2011.

The bad loan ratio of Spanish banks decreased 0.94 percentage points to 10.44% in December for technical rather than substantive reasons.

The British Rightmove house price index jumped 2.8% in February and reached its highest level since 2008.  Such was 1.1% higher than in February 2012.

Thailand’s GDP last quarter was 18.9% greater than a year earlier when the level was depressed by heavy flooding.  GDP was also 3.6% higher than in 3Q, a sequential gain that was nearly three times bigger than analysts had forecast.  GDP rose 6.4% in 2012, rebounding from a tiny 0.1% gain in 2011.

South Korean producer prices fell 1.6% between January 2012 and January 2013.  Singapore posted a lower SGD 1.86 billion trade surplus last month, and the on-year rebound in non-oil exports failed to meet expectations.

Australian motor vehicle sales fell on month in January, trimming the 12-month increase to 10.8% from 17.8% in the year to December. New Zealand’s Performance of Services index improved 1.1 points to a reading of 52.6 in January.  On-year Israeli GDP growth slowed to a 3+ year low of 2.5% last quarter from 2.8% in 3Q12.

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

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