Firmer Dollar and Yen

February 23, 2015

The dollar is unchanged against the yen and yuan but stronger by 0.9% against the Swiss franc, 0.6% relative to the euro and Australian dollar, 0.4% versus the loonie, 0.2% vis-a-vis sterling and 0.1% the kiwi.

Share prices rose 0.7% in Japan, 0.5% in Australia and 0.4% in South Korea but fell 0.9% in India and 0.4% in Singapore.  China is still shut for Lunar New Year celebrations.  Among European bourses, there have been gains of 0.2% in Germany, 0.6% in Spain and Italy and 0.5% in Switzerland but losses of 0.4% in Great Britain and 0.3% in Greece. 

The market’s verdict is that Greek authorities blinked.  Greece has a 4-month extension of bailout support but only under conditions agreed by the prior government.

Nonetheless, a reprieve is a reprieve, and the 10-year Greek sovereign debt yield dropped back 23 basis points.  The ten-year British gilt and German bund yields are up by five and two basis points, while the 10-year Japanese JGB settled back a basis point.

Gold and oil prices fell below important thresholds.  WTI oil declined 2.3% to $49.62 per barrel.  Comex gold depreciated 0.9% to $1,194.50 per ounce.

The message from the Bank of Japan’s January 20-21 minutes and comments today by Governor Kuroda is that slumping oil prices will push outward attainment of the 2% inflation goal but that the long-term effect will be upward on growth and therefore inflation.  So there’s no need for additional monetary easing, and that’s the view of most corporate leaders, too, according to a survey done by Nikkei News.

Japanese supermarket sales in January were 1.7% below their year-earlier level.  That’s similar to December’s 1.8% on-year drop.

The IFO Institute’s monthly German business climate index edged up 0.1 to 106.8.  A much bigger advance had been forecast by analysts, but the assessment of current conditions slid 0.4 points to a 2-month low, holding down the extent of improvement.  The wholesale and construction sectors registered lower readings in February than January.  Overall, however, IFO officials felt that “Germany’s economy is proving robust in the face of geopolitical uncertainty.”  IFO’s service-sector climate index deteriorated to a 3-month low of 22.7 in February, 1.9 points below January’s reading.

Moody’s cut Russia’s credit rating.  U.S. Secretary of State Kerry warned of more sanctions against Russia if advancing pro-Russian rebels in Ukraine do not stand down and abide by the latest cease fire.

The Confederation of British Industries index of distributive economic trends continues to weaken steeply, declining 38 points to a 15-month low of +1 in February on top of a 22-point loss in January.

Swiss on-year M3 money growth in January of 3.2% versus 3.3% in December was not discernibly affected by the Swiss National Bank’s suspension of currency market intervention in the middle of January.

Consumer prices in Hong Kong and Singapore respectively rose 4.1% and fell 0.4% between January 2014 and January 2015.  Although comparatively high, Hong Kong’s pace was at a one-year low.  Czech producer prices fell 1.0% on month and 3.5% on year in January.

After climbing near to an 8-month high in January, Czech consumer confidence fell a point to a 3.3 reading in February.  However, business confidence improved, so overall economic sentiment only ticked down 0.1 of a point to 10.4.

In the 2014 Academy Awards, Birdman won best picture, and Eddie Redmayne and Julianne Morre took the prizes for best actor and best actress.

Scheduled U.S. data releases this Monday include the Chicago Fed National Activity Index, existing home sales, and the Dallas Fed manufacturing index.  Mexico reports retail sales, and the Bank of Israel holds its monthly policy meeting. 

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

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