Steadier Currency Landscape
November 8, 2013
The euro sank yesterday to as low as $1.3294 after the surprise ECB rate cut, but the lows didn’t hold. Key currency relationships are steady today. The euro is at $1.3419 and unchanged from Thursday’s close. The dollar is also unchanged against the loonie, Australian dollar, sterling and yuan. The greenback has edged up 0.1% relative to the yen and Swiss franc and has slipped 0.1% vis-a-vis the kiwi.
Share prices overnight continued yesterday’s correction in most markets. Equities lost 1.4% in China and Thailand, 1.3% in the Philippines, 1.0% in Japan and South Korea, 0.8% in India and Singapore, 0.7% in Taiwan, 0.6% in Hong Kong, and 0.4% in Australia. In Europe, the Paris Cac is 1.0% lower, and stocks have fallen by 0.7% in Germany, 0.6% in Spain, 0.5% in Britain, and 0.4% in Italy.
The 10-year British gilt yield firmed two basis points, while Japanese JGBs and German bunds are unchanged.
Gold is 0.1% firmer at $1309.10 per ounce, while the price of WTI crude oil has edged 0.1% lower to $94.14 per barrel.
In overnight central bank action,
- The People’s Bank of China allowed domestic money markets to remain snug by again not injecting extra liquidity.
- The Central Bank of Peru cut its key interest rate to 4.0% from 4.25%, the level since a hike in May 2011. The reduction was not anticipated and marks the first easing move since August 2009. Officials called this action a preventative one, and it comes against the backdrop of slower growth.
- The Central Bank of Serbia cut its one-week repo rate by 50 basis points to 10.0%, the second such reduction in three weeks. It acted after recent news of in-target inflation for the first time since June 2012 and as a counter-measure against a weakened growth outlook.
- The Reserve Bank of Australia’s quarterly Monetary Policy Statement cut the projected 2014 growth range by a half percentage point to 2-3% and projects sub-3% inflation for the policy horizon.
Traders await the release of several U.S. statistics today, most notably the Labor Department jobs report but also productivity, personal income and spending, and the U. Michigan consumer sentiment index. Canada also reports labor statistics as well as housing starts. Lockhart, Fisher, Bernanke, Dudley and Williams of the Fed speak publicly.
Meanwhile, trade data released overnight in China and Germany add to the controversy over policies in those countries that promote growth at the expense of growth elsewhere.
- China’s $31.1 billion trade surplus in October was twice the size of the $15.2 billion surplus in September and the largest surplus since last December. It resulted from an acceleration in on-year export expansion to 5.6% (three times faster than forecast) from negative 0.3%. Imports went up 7.6%.
- Germany experienced a record unadjusted trade surplus in September of EUR 20.4 billion, breaking the prior peak month in June 2008. The seasonally adjusted surplus was EUR 18.9 billion, up from EUR 15.8 billion in August, EUR 15.0 billion in July, EUR 16.5 billion on average in the first half, and EUR 15.7 billion per month in 2012. Germany’s current account surplus jumped to EUR 19.7 billion in September from EUR 10.1 billion in August. The year-to-date current account surplus of EUR 135.1 billion is marginally bigger than that of EUR 133.4 billion in January-September of 2012.
Japanese international reserves increased by $3.305 billion last month following a $19.2 billion jump in September. Japanese stock and bond transactions last week generated a JPY 291 billion net capital outflow after an inflow of JPY 664 billion in the previous week.
A number of countries reported industrial production data. In the year to September, output rose 7.0% in Romania, 6.4% in Turkey, 5.5% in Hungary and 2.7% in the Netherlands but fell 1.8% in Greece, 1.7% in Finland, 1.4% in France, and 0.9% in Sweden.
British construction output went up 5.8% between September 2012 and September 2013. The U.K. goods and services trade deficit widened 0.5% to GBP 3.268 billion in September, thanks to a GBP 259 million increase in the merchandise trade shortfall to GBP 9.816 billion.
Swiss retail sales volume dropped 0.7% in September and slowed to a 12-month 1.0% rate of increase from 2.5%. The seasonally adjusted Swiss unemployment rate held steady at 3.2% last month. The 7.6% Czech jobless rate was also unchanged from September.
France posted a EUR 5.8 billion trade deficit in September, 14.3% wider than August’s shortfall. Austria’s trade deficit grew 19.7% in August. Malaysia’s trade surplus of MYR 8.67 billion in September was 22% wider than the month before.
Copyright 2013, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: China trade surplus, Dollar, Euro, German current account surplus, Peoples Bank of China