Comparatively Quiet Ahead of FOMC Minutes

April 9, 2014

The dollar has recovered 0.3% against the yen.  The greenback is down 0.2% against the kiw and 0.1% versus the euro, Swissie and Australian dollar.  It’s unchanged relative to sterling but up 0.1% against the loonie and yuan.

Japan’s Nikkei slumped another 2.1% on earlier yen strength and the lack of extra BOJ stimulus.  In other Pacific Rim markets, stocks advanced 1.6% in India, 1.1% in Hong Kong, 1.0% in Australia, 0.7% in New Zealand, 0.5% in Taiwan, and 0.3% in South Korea.  Equities in Europe are up by 0.8% in Britain, 0.6% in Italy, 0.5% in France, 0.4% in Spain and 0.3% in Germany.  A rise in U.S. stocks at the open is signaled by futures.

The 10-year British gilt is a basis point firmer.  Ten-year German bund and Japanese JGB yields are unchanged.  Peripheral bond spreads within the Ezone have narrowed sharply further this month.

The prices of gold ($1,309 per ounce) and oil ($102.52 per barrel) are unchanged from Tuesday’s close. 

There have been two interest rate announcements.

  • The Swedish Riksbank’s repo rate as expected was left at 0.75%, its level since a 25-basis point cut in December.  A rather dovish statement was released.
  • The National Bank of Poland left its 7-day repo rate at a record low of 2.5%, which was also the result analysts were anticipating.  The key Polish interest rate has been at 2.5% since a 25-bp cut last July.

The German current account surplus in February of EUR 13.9 billion and the seasonally adjusted trade surplus of EUR 15.7 billion were smaller than forecast.  The January-February average trade surplus of EUR 16.5 billion is down from a 4Q13 mean of EUR 17.7 billion per month.  Exports fell 1.3% on month in February, whereas imports rose by 0.4%.  The January-February combined current account surplus of EUR 29.1 billion was still 10.6% wider than a year earlier.

Britain’s goods and services trade deficit of GBP 2.058 billion and merchandise trade gap of GBP 9.094 billion in February were smaller than the January deficits and less than forecast.  Goods exports and imports respectively fell 1.6% and 2.2% between January and February.

Portugal, Denmark Romania and Hungary also released trade figures.  Portugal’s deficit widened 14.8% on month in February.  The Danish surplus of DKK 8.7 billion was 24% bigger than in January.  Likewise, Hungary’s EUR 766 million surplus had widened 17%.  Romania registered a somewhat larger EUR 310 million deficit.

U.K. shop prices in March were 1.7% lower than a year before after posting a 1.4% on-year drop in February.

Sovereign Greek bonds will be auctioned Thursday for the first time in about four years. 

Greek industrial output adjusted for variation in working days was 1.7% greater in February 2014 than a year earlier.  Dutch industrial production in the same span rose by a similar 1.6%.  Czech CPI inflation held steady at a minuscule 0.2% in March.

Australian consumer confidence improved last month for the first time since October, rising 0.3%.  Also in Australia, home loans climbed 2.3% in February, the best gain in five months.

South Korean unemployment dropped to 3.5% in March, lower than expected.

FOMC minutes from the March meeting will be released later today.  U.S. wholesale inventories arrive, too. Mexico releases the CPI, PPI and trade balance.  Brazilian consumer prices get reported as well.

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



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