Fresh Declines in Ukraine and Russian Currencies

February 26, 2014

Overnight dollar movements have been limited to gains of 0.2% against the yen and Aussie dollar and of 0.1% relative to the Swiss franc, offset by 0.1% dips against the kiwi, loonie and sterling.  The dollar is unchanged against the yuan and euro. 

A follow-up Ukraine hryvnia devaluation to that announced February 6 has been engineered, this time by a smaller 4.1%.  The currency is down 15% since the start of the month.  Russia’s ruble lost ground overnight in sympathy.

In stock market action, there were losses of 1.0% in Indonesia as well as 0.5% in Singapore and Japan but gains of 0.7% in India, 0.4% in the Philippines, 0.3% in South Korea, China, Taiwan and Hong Kong, and 0.1% in New Zealand and Australia.  In Europe, equities have declined so far today by 0.3% in Paris, London and Zurich.  The German Dax has dipped 0.1%, but the Spanish IBEX is 0.2% firmer.  In Italy where doubts exist that Prime Minister Renzi can accomplish what he plans, stocks are unchanged on the day.

Ten-year German bund and British gilt yields are a basis point firmer, while the 10-year Japanese JGB yields stayed low at 0.58%.

WTI oil prices firmed 0.4% to $102.21 per barrel, but the slide continued in U.S. natural gas prices amid reports that the Polar Vortex is going away for the rest of this winter about ten days from now.  Such has been responsible for much colder-than-normal temperatures east of the Mississippi River. Gold is 0.1% lower at $1,342 per ounce.

British revised GDP figures were very similar to their preliminary estimates.  Real GDP went up 0.7% last quarter, a 2-quarter low, and by 2.7% on year, which was higher than the 1.9% climb between 3Q12 and 3Q13.  GDP rose 1.8% in 2013 compared to 2012.  In comparisons of 4Q to 3Q (not annualized), personal consumption grew by a smaller 0.4%, and government expenditures rose by 0.3%.  Business investment (+2.4%) and net exports (augmenting GDP by 0.4 percentage points of growth) were the main drivers of last quarter’s expansion. 

Britain’s index of services grew 0.8% in the fourth quarter.  Total investment was 8.5% higher than a year earlier.

Swedish retail sales climbed 0.3% on month and 2.6% on year in January.  Those results fell a little short of expectations.

The indicator of Swiss consumption compiled by UBS Bank suffered a setback to a reading of 1.44 last month after 1.80 in December.

Italian wage inflation accelerated 0.1 percentage point last month to 1.4%.  Home mortgage approvals in Spain were 30.1% lower in December than a year before following a 27.4% on-year drop registered in November.

GDP in Hong Kong speeded up in 4Q to a quarterly 1.1% advance and was 3.0% above the year-earlier level.

Industrial production in Singapore dived 8.1% in January, affected by the Lunar New Year, but was 3.9% greater than in January 2013.

Consumer confidence in South Korea lost a point to a reading in February of 108.

Taiwan’s jobless rate slipped marginally to 4.07% in January, lowest since July 2008.

An official at China’s central bank called liquidity still excessive as a result of capital inflows.

Brazilian monetary authorities seem likely to announce another interest rate hike today.

U.S. new home sales will be released today.  Fed officials Sandra Pianalto and Eric Rosengren speak publicly. 

Tomorrow sees the rescheduled part to of Chairwoman Yellen’s Humphrey Hawkins testimony.  A slew of data get released by many governments on Thursday and Friday as another month draws to a close.

Copyright 2014, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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