Dollar in a Holding Pattern

December 5, 2013

The dollar is unchanged from Wednesday closing levels against the euro, Swissie, kiwi and yuan.  The U.S. currency has edged up 0.2% against sterling but is 0.2% lower versus the yen and 0.1% softer relative to the loonie.  It has ticked 0.1% higher against the Aussie dollar, whose trade deficit in October widened more than expected.  Australian equities fell 1.4%.

Investors await the ECB press conference and a slew of important U.S. statistics: revised GDP, jobless insurance claims and factory orders.

In the Pacific Rim, Japan’s Nikkei dropped 1.5%, and stocks lost 1.2% in Singapore, 1.4% in Australia, 0.6% in Indonesia, 0.5% in Taiwan, 0.3% in New Zealand and China, and 0.1% in South Korea.  In Europe, stock prices are unchanged in Britain and Italy, up 0.2% in Spain, up 0.1% in Germany and off 0.1% in France, where the highest quarterly rate of unemployment in 16 years (10.9%) was reported.

The ten-year Japanese JGB and German bund yields are unchanged.  The 10-year British gilt slid two basis points.

Gold fell 1.0% to $1,235.20 per ounce, while oil continued to recover, rising 0.4% to $97.67 per barrel.

Japanese stock and bond transactions last week generated a net 294 billion yen inflow after an outflow of JPY 589 billion in the week of November 22.

Japanese Prime Minister Abe’s LDP government unveiled yesterday plans for a JPY 5.4-5.6 trillion fiscal stimulus to counterbalance any drag from the upcoming sales tax hike.  Specifics will be embodied in a supplementary budget due next week.

China’s central bank again failed to add liquidity, thus exerting upward pressure on local interest rates.

Australia recorded a larger A$ 529 million trade deficit in October.  Exports dipped 0.1% on month, while imports rose 0.8%.  The prior two monthly deficits amounted to A$ 784 million in August and A$ 271 million in September.  July also saw a deficit.

The JP Morgan global composite purchasing managers index rose 2.2 points in November to 54.3, indicating a faster pace of expansion.

Germany’s construction PMI in November fell back to September’s 52.1 reading from 52.6 in October.  A reading of 55.1 in August was a 17-month high.

Norges Bank left Norway’s central bank deposit rate at 1.5%, the level since cuts of 50 basis points in December 2011 and 25 bps in March 2012.  This decision was expected.

Likewise, the decision not to modify Bank of England monetary policy settings — a 0.5% interest rate and a GBP 375 billion limit on the asset purchase program — met expectations.  British car sales increased 7% between November 2012 and November 2013.

Finnish GDP last quarter was unchanged from 2Q and 1.0% less than in the third quarter of 2013.  Imports outpaced exports, exerting a drag, and personal consumption was very subdued.

Spanish industrial production fell 0.8% in October, halving the 12-month increase to 1.8%.  Czech retail sales dropped 0.8% on month and 0.6% on year in October.  Dutch consumer price inflation ticked downward to 1.5% in November from 1.6% in October.  Consumer prices in Cyprus, down 2.1%, recorded their fifth straight 12-month decline in November.

Filipino CPI inflation quickened to 3.3% in November from 2.9% the month before, while producer prices posted a smaller 12-month decline of 5.6% in October after falling 6.7% in the year to September.  Taiwan’s CPI in November was 0.7% higher than a year earlier, while the WPI index recorded a 1.0% 12-month drop.

South Korean GDP growth last quarter was confirmed at the preliminary figure of 1.1% from 2Q and 3.3% on year.  GDP had risen 2.3% in the year to 2Q.

Today sees the release of Canadian building permits and the IVEY-PMI survey results.  Lockhart and Fisher of the Federal Reserve are scheduled to speak publicly, but the main event will be ECB President Draghi’s press conference.  The Governing Council is not expected to change ECB monetary policy settings.

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

Tags: , , ,


Comments are closed.