Euro Weakened Further

January 8, 2015

The dollar is trading currently near its new peaks of $1.1754 per euro and CHF 1.0218.  The dollar is now 0.7% higher against those currencies than at Wednesday’s close.  The dollar also rose 0.6% against the yen and 0.3% versus sterling but has fallen by 0.3% relative to the Australian dollar and 0.1% against the kiwi and loonie.  The Chinese yuan is steady.

Chinese share prices slumped back 2.3%, but that was an exception in an otherwise risk-on environment.  Equities rose 1.7% in Japan and Taiwan, 1.4% in Singapore and India, 1.1% in South Korea, 0.7% in Hong Kong, 0.5% in Australia and 0.3% in New Zealand.  European stock markets are doing even better, with gains thus far today of 2.2% in Italy, 2.1% in France, 2.0% in Spain, 1.9% in Switzerland and 1.7% in Germany and Britain.

West Texas Intermediate oil recovered 0.8% to $49.03 per barrel, while Comex gold slid by 0.4% to $1,206.30 per ounce.

Sovereign debt yields haven’t changed much.  The 10-year German bund is unchanged.  The 10-year British gilt is a basis point higher, and the 10-year Japanese JGB is a basis point lower than yesterday.

The Monetary Policy Committee of the Bank of England left its 0.5% Bank Rate and GBP 375 billion asset purchase program limit unchanged as anticipated.

There’s been a second shooting near Paris, this time of a cop.

German industrial orders data for November were weaker than forecast, dropping 2.4% on month after October’s 2.9% advance and by 0.4% on year.  Domestic orders slumped 4.7%, whereas foreign orders were down only 0.7% from October’s level.  The average level of orders in October/November were 0.9% above their 3Q level.

Retail sales in the euro area increased by 0.6% in volume for a second straight month in November, beating expectations.  Sales were also 1.5% greater than a year before.  Non-food sales rose 1.4% on month and 2.8% on year.

Euroland producer prices fell on month by 0.3% in both October and November and posted a 1.6% decline in the year to November.  Energy dropped 0.7% on month and 5.0% on year.  All other producer prices were just 0.2% below their November 2013 level.

Britain’s Halifax index of home prices increased 0.9% on month in December and were 7.8% higher in 4Q than a year earlier.  These results slightly exceeded forecasts in the street.

The Greek jobless rate of 25.8% in October was above forecast but below September’s 26.0% level.

Building permits in Australia advanced 7.5% in November, which was much stronger than expected, and posted a 12-month gain of 10.1%, most since August.

Japanese stock and bond transactions last week generated a net JPY 250 billion capital outflow, which was only a fifth as much as in the week of December 27.

Chicago Fed President Evans indicated concern that inflation would remain too low and suggested that keeping current interest rate levels all this year might not be a bad idea.

Dutch consumer price inflation decelerated from 1.1% in October and 1.0% in November to a 7 year 2 month low of 0.7% in December.

Several industrial production figures have been released.  In Romania and Hungary, such posted on-year advances of 7.7% and 5.8% in November.  Norwegian output fell 1.9% on month but climbed 4.2% on year.  Brazilian production dropped 0.7% on month and 5.8% from November 2013, and production in Turkey dipped 0.1% on month, which slashed the 12-month rate of rise to 0.7% from 2.4%.

Irish retail sales edged up 0.2% in November and were 4.7% higher than a year before.  Romanian retail sales growth accelerated to 7.7% on year in November.

Business confidence in South Africa dived 2.8% to a reading of 88.3 last month after 90.8 in November.

U.S. consumer credit and weekly jobless insurance claims arrive today.

Copyright 2015, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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