Dollar Narrowly Mixed Ahead of U.S. Monthly Jobs Report

February 6, 2015

The dollar is unchanged against sterling, down 0.2% against the Swiss franc and Japanese yen, up 0.2% vis-a-vis the euro, up 0.1% relative to the loonie but down 0.1% against the Chinese yuan.  Larger declines of 0.6% against the Australian dollar and 0.4% relative to the New Zealand dollar have occurred.

This week’s 50-basis point cut in bank reserve requirements in China hasn’t assuaged concern about that economy.  Chinese share prices fell another 1.6% today.  The Hong Kong Hang Seng index lost 0.4%, and equities lost 0.5% in India.   But markets in Singapore (0.7%), Japan (+0.8%), Australia (+0.2%) and South Korea (+0.1%) moved higher.  In Europe, the direction of stocks is downward, with losses so far today of 0.6% in Germany, 0.4% in Italy, 0.3% in France, and 0.2% in Britain.

An extra meeting of European finance ministers next week to discuss Greece has been scheduled.

Ten-year sovereign debt yields fell by four basis points in Switzerland and a single basis point each in Germany and Japan.  The 10-year British gilt is unchanged.

West Texas Intermediate oil rebounded 1.5%, crossing above $50 to $51.93 per barrel.  Comex gold edged 0.1% lower to $1,263.98 per ounce.

German industrial production and French and British trade figures reported today were weaker than anticipated.

  • German output edged 0.1% higher for a second straight month in December and recorded a 12-month decline of 0.7%.
  • The British total trade deficit widened 57% on month to GBP 2.895 billion in December, and the goods component recorded a GBP 10.154 billion shortfall, GBP 871 million greater than in November.
  • The French trade deficit increased 11.7% to EUR 3.45 billion in December.

Germany wasn’t the only European nation to report December industrial production.  In Hungary, such fell 1.7% on month and posted a smaller 4.6% on-year rise.  In the Czech Republic, production climbed 0.6% on month, half as much as in November.  Danish output rose 1.0% on month and 2.8% on year.  Norwegian production grew 0.3% from November and 5.5% from a year earlier.  Spanish output was 0.9% weaker than in December 2013.

Swiss retail sales volume increased 1.0% in December and 2.2% from a year before.  Austria’s trade balance swung from a minuscule deficit in October to a EUR 0.5 billion surplus in November, and Austrian wholesale prices registered a larger 6.3% on-year decline in January after falling 0.5% in the year to December.

The Reserve Bank of Australia published its latest quarterly Monetary Policy Statement, which cuts projected growth in 2015 by a quarter percentage point to a range of 2.25-3.25% and projected total CPI inflation this year by a half percentage point to a corridor of 2-3%.  The Australian construction purchasing managers index for January was at a 3-month high and 1.5 points better than in December, but it nevertheless was below the 50 no change threshold for a third straight time at 45.9.

Japanese FX reserves rose $555 million last month, only partly reversing a drop of $8.53 billion in December, but the level remained substantial at $1,261 trillion.

Japan’s index of leading economic indicators rose 1.5 points to a reading of 105.2, and the index of coincident economic indicators improved 1.5 points as well to 110.7.  However, officials left the same assessment that while the economy is improving, the increase of the 3-month average has been small.

Japan recorded a JPY 1.471 trillion customs trade deficit in the first twenty days of January.  January is the weakest season for Japanese trade, and this deficit was 26.7% smaller than a year earlier, as exports climbed 14.8% while imports shrank by 2.3% on year.

Canada, as well as the United States, reports January data on unemployment, jobs growth, and average wage growth.

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

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