Dollar Drifts Downward along with the Snow

December 10, 2013

Much of the U.S. is blanketed with the white stuff, including the Northeast which is experiencing wintry weather for a second straight day.

The dollar fell overnight by 0.3% against the yen, 0.2% versus the New Zealand and Australian dollars and 0.1% relative to the euro, Swiss franc, loonie and sterling.  The Chinese yuan was held steady as the PBoC central bank again declined to add liquidity.  Chinese retail sales, industrial production and fixed asset investment data were released.

Share prices fell 1.0% in Singapore, 0.4% in South Korea and 0.3% in Japan, India, Hong Kong and New Zealand.  Stocks rose 1.5% in Indonesia, 0.4% in Thailand, and 0.1% in China and Malaysia.  Equities are unchanged in Australia and so far in France.  Elsewhere in Europe, stocks firmed so far by 0.6% in Spain, 0.3% in Italy, and 0.2% in Germany and Britain.

The ten-year British gilt yield slid two basis points to 2.90%, while comparable German bunds and Japanese JGBs are at yesterday’s levels.

Gold rose 0.9% to $1245.20 per ounce. WTI crude oil advanced by 1.2% to $98.49 per barrel.

Japanese consumer confidence improved 1.3 points to a reading in November of 42.5 after a 4.2-point drop in October.

Japanese M2 money recorded on-year growth of 4.3%, the most in a couple of years and up from 4.1% in October, 3.8% in the year to 3Q, 3.5% in 2Q and 2.9% in 1Q.  Accelerating money and credit growth is a primary objective of the three-pillar strategy known as Abenomics.  But the third pillar, consisting of structural reforms, has been sorely lagging in its implementation, and the expansion lost considerable momentum after mid-2013.

Staying with Japan, the Ministry of Finance’s quarterly survey of business sentiment revealed a 3.7-point decline in the summary sentiment reading for all large firms to 8.3 in 4Q.  While a rebound is anticipated ahead of the planned sales tax hike due that’s scheduled in April, the projected reading for the spring quarter of 2014 slumps badly to negative 4.1.  The 4Q readings deteriorated for both large manufacturers and large non-manufacturers.  The tertiary index, a measure of monthly service-sector activity, fell by 0.7% in October after holding unchanged in September, and its 12-month increase shrank a whole percentage point to 0.3%.

Released Chinese data showed on-year industrial production growth of 10.0% in November, down from 10.3% in October.  Such was a 4-month low but stronger than the first-half performance.  Retail sales growth accelerated to 13.7%, the biggest on-year gain so far in 2013 but not by a huge margin. Fixed asset investment scored a 19.9% increase in January-November, slightly less than the ten-month pace of 20.1%.  The first-half rise was also 20.1%.

EU central bankers and finance ministers meeting in Brussels are said to be making progress toward a banking system deal.

Bank of England Governor Carney said inflation in the U.K. has receded lately more extensively than anticipated, and he warned that growth could be depressed by weak European demand.

The British goods and services trade deficit of GBP 2.62 billion in October was nearly identical to October’s GBP 2.64 billion shortfall.  The merchandise trade deficit narrowed 3.7%, but the services surplus also shrunk. 

British industrial production rose 0.4% in October on top of a 0.9% increase the month before, and its 12-month increase climbed to 3.2%.  Factory output also went up 0.4% on month, with a much bigger 2.7% on-year advance.

In other industrial production released today, Greece saw a larger 5.2% on-year decrease in October. Italian production went up by a greater-than-forecast 0.5% from September, resulting in just a 1.1% on-year decline.  Swedish output surprised the other way, with drops of 1.7% from September and 5.0% from October 2012. Romanian production rose 1.7% on month and 9.9% on year in October.  Dutch output rose for a second straight month, adding 0.4% to September’s 1.7% increase, and was 2.1% greater than in October 2012.  Last but not least, French industrial production dipped 0.3% and recorded a larger 12-month decline of 3.4% after a slide of 1.4% between September 2012 and September 2013. 

A string of nine consecutive negative quarters was broken in Italian GDP according to revised 3Q13 figures, but neither did such rise.  The unchanged quarter-over-quarter result was accompanied by a 1.8% drop from 3Q12.  Turkish GDP posted 3Q increases of 0.9% from 2Q and 4.3% on year.

Norwegian consumer prices edged up 0.1% in November and recorded a 2.5% 12-month rate of increase.  Norwegian producer prices rose 0.6% on month and 3.2% from November 2012.  Danish CPI inflation slowed further to a mere 0.5%.  In Cyprus consumer prices fell 0.8% in the year to November. 

According to compilations of the National Bank of Australia, business conditions improved a point to a negative 3 reading in November, while business confidence slid a point to a 3-month low of +5.  Home loans in Australia climbed 1.0% between September and October.

U.S. data to be released Tuesday include wholesale inventories, the JOLTS index of job hirings and separations, and weekly chain store sales.  Anecdotal evidence so far suggests a softer Christmas shopping season.

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

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