Yen Soars as Kiwi and Aussie Dollars Sink

June 7, 2013

The grand-daddy of all U.S. data releases, the Labor Department jobs report, is due today at 12:30 GMT.

The U.S. dollar plunged 1.8% against the yen while advancing by 1.2% and 1.0% against the Australian and New Zealand dollars.  The yen hit overnight highs of 95.28 per dollar and 126.27 per euro.  Japanese Finance Minister Aso said Japan has not immediate plans to intervene in currency markets.   The kiwi is below 80 U.S. cents.

The greenback otherwise has dipped 0.3% against the Swiss franc and 0.2% versus the loonie, risen 0.2% relative to sterling and remained unchanged against the euro and yuan.

Chinese President Xi is in California for talks with U.S. President Obama.

Share prices are lower.  Stocks fell 1.8% in South Korea, 1.7% in China, 2.7% in Indonesia, 1.2% in Hong Kong, 0.9% in Australia and 0.4% in New Zealand.  The Japanese Nikkei’s 0.2% drop was comparatively small.  In Europe, equities have fallen by 0.7% in Germany, 0.5% in Italy, 0.4% in Spain, 0.3% in Britain, and 0.2% in France.

Sovereign debt yields are lower, with drops of 5, 3, and 3 basis points in 10-year British gilts, German bunds and Japanese JGBs.

Gold eased 0.3% to $1411.70 per ounce.  Oil firmed 0.4% to $95.11 per barrel.

The German current account and trade surpluses in April exceeded expectations.  The EUR 17.6 billion current account compares to EUR 11.9 billion in April 2012.  The trade surplus equaled EUR 17.7 billion seasonally adjusted and EUR 18.1 billion not so adjusted.  The trade surplus in 1Q13 averaged EUR 17.0 billion per month, up from EUR 15.7 billion per month in 2012 and a pace of EUR 13.2 billion per month in 2011.  Exports and imports rose by 1.9% and 2.3% between March and April.

German labor costs rose 1.1% in the first quarter and accelerated from an on-year rise of 3.1% in 4Q12 to 3.9%.  All of the acceleration came from non-wage costs.

German industrial production climbed 1.8% on month and 1.0% on year in April.  The monthly gain was the third in a row and the largest since March 2012.  Construction went up 6.7%, while manufacturing output climbed 1.5%.

Dutch industrial production firmed 0.6% in April and recorded a smaller-than-forecast 1.9% 12-month decline. 

The French trade deficit of EUR 4.52 billion in April was essentially the same size as the shortfall in March.  Finland’s trade deficit narrowed sharply to EUR 35 million in April from EUR 250 million in March. Hungary’s industrial production in April was 5.3% greater than a year earlier, beating expectations by a factor of two.  Czech industrial output fell 0.7% in April and was merely 0.5% higher than a year earlier. Portugal posted a EUR 1.99 billion trade deficit in April, 7% bigger than in March.

Greek GDP fell 5.6% in the year to the first quarter and included declines of 11.4% in business investment and 8.3% in personal consumption.  GDP in Cyprus was 4.4% smaller in the first quarter than a year before.  Icelandic GDP advanced just 0.8% between 1Q12 and 1Q13.

Britain’s goods and services trade deficit narrowed to GBP 2.579 billion in April from EUR 3.249 billion in March.  The merchandise trade deficit of EUR 8.224 billion was 6.5% smaller than predicted and 10.5% lower than the March gap.

Australia’s construction purchasing managers index ticked up 0.1 to a very weak 35.3 reading in May and remain weaker than the 1Q average score of 40.3.

Japanese international reserves fell $7.721 billion in May.  Swiss reserves rose by CHF 5.3 billion in May.  Japan’s index of leading economic indicators rose to 99.3 in April, best since October 2007.  The index of coincident economic indicators was 94.8, best since May 2012.

South Korean GDP was revised to show quarterly growth of 0.8% in 1Q13.  The on-year pace of 1.5% was unchanged from the preliminary estimate.  The Bank of Korea, which cut its 7-day repo rate by 25 bps to 2.5% on May 9, makes its next rate announcement on June 13.

The Central Bank of Sri Lanka left its 7.0% repo rate unchanged as expected.

Besides the aforementioned jobs report, U.S. consumer credit figures will arrive today.  Canada also reports labor statistics as well as productivity and unit labor costs.

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

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