Stronger Yen

January 23, 2015

Saudi Arabian King Abdullah has died.  Former Crown Prince Salman is the new king.

The dollar has depreciated 0.8% against the yen while rising 0.9% versus the Aussie dollar, 0.5% relative to the euro, 0.3% vis-a-vis the yuan, 0.2% against the kiwi and 0.1% versus the loonie and Swiss franc. Sterling is 0.1% firmer against the dollar.

Share prices have advanced 1.8% in Germany, 1.5% in France, 1.7% in Switzerland, 1.1% in Japan, 1.3% in Hong Kong, 1.4% in Indonesia, 0.9% in India and 0.8% in South Korea.  Smaller stock market changes are in Canada and New Zealand (+0.5%), Spain (0.3%), Britain (0.2%), and China (+0.1%).

Ten-year sovereign bond yields are down 8 basis points in Japan, 5 bps in the U.K. and U.S., 3 bps in Germany and 1 basis point in Switzerland.

West Texas Intermediate oil declined 0.9% to $45.91 per barrel.  Comex gold slid 0.4% to $1,295.10 per troy ounce after closing above $1,300 on Thursday.

Bank of Governor Kuroda applauded the ECB’s decision to begin full quantitative easing and said it would tack an extra year to around March 2016 before 2% core inflation is secured in Japan.

Several preliminary purchasing manager survey results for the month of January were reported with mixed signals.

  • China’s PMI in manufacturing (49.8) was below the 50 no change threshold for a second straight time although indicating a slightly shallower rate of contraction than in December or than analysts were predicting.  Production (50.1) rose by 0.7 points.
  • Japan’s manufacturing purchasing managers index advanced 0.1 point to a three-month high of 52.1 in January, but production slipped 0.2 points.
  • The euro area’s composite PMI of 52.2 was 0.8 points better than in December.  That’s a five month high and suggests a 0.2% pace of GDP growth at the start of 2015.  Manufacturing (51.0) and service-sector activity (52.3) reached 6- and 3-month highs.  The improved conditions in Euroland were most experienced outside of the region’s two largest economies.
  • France’s composite, factory, and services PMI readings each printed at 49.5 in January amid broadening price declines.  While the manufacturing score was an 8-month high, services worsened to a 2-month low.
  • Germany’s composite PMI rose by 0.6 points to a 3-month high.  New business rose for the first time in three months, but input prices fell the most quickly since September 2009.
  • The U.S. manufacturing PMI compiled by Markit Economics unexpectedly dipped by 0.2 points to 53.7 in January.

In other U.S. data reported today,

  1. The Chicago Fed National Activity Index swung to –0.05 in January from 0.92 in December, connoting below-trend activity in the national economy.
  2. Existing home sales were at an annualized pace of 5.04 million last month, 2.4% higher than in November which had seen a 6.3% monthly drop.
  3. The index of leading economic indicators rose 0.5% last month after a 0.4% November increase.  The coincident index went up by a smaller 0.2%.

Canadian CPI inflation slowed to 1.5% in December from 2.0% in November despite a 0.1 percentage point uptick in core inflation to 2.2%.  Gasoline prices plunged 9.8% on month and 16.6% on year.

Canadian retail sales rose 0.4% on month and 4.8% on year last month.  Excluding motor vehicles and parts, the 12-month advance was 3.6%.

Brazil’s current account deficit widened marginally more than 10% on month to $10.317 billion in December.  The record annual shortfall of $91.5 billion was 12% wider than 2013’s deficit, which had also been a record high up to then.

French business confidence remained unchanged in January at readings of 99 in manufacturing, 92 in services and 94 overall.

Belgium’s business climate index worsened by 1.9 points to a –8.8 reading this month.  Manufacturing fell by 1.4 points to –10.5.

British retail sales rose 0.4% on month and 4.3% on year in December, easily beating expectations.

Real GDP grew 0.4% last quarter in South Korea but slowed to a 2.7% year-over-year advance.  Singapore consumer prices fell 0.2% both on month and on year in December.

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

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