Several Countries Report Industrial Production and EU Commission Turns Down Greek Debt Proposal

June 10, 2015

The dollar recorded overnight losses of 0.9% against the yen, 0.6% versus the Australian and New Zealand dollars, 0.5% vis-a-vis the loonie, 0.4% relative to sterling and 0.1% against the Swiss franc.  The Chinese yuan was steady, and the dollar edged up 0.1% against the euro.

  • Bank of Japan Governor Kuroda called the yen weak and said it is unlikely to depreciate further in real effective terms.
  • In dovish remarks, Reserve Bank of Australia Governor Stevens warned that a further cut of the official cash rate remains possible.
  • The attempt by Greek negotiators to buy more time and to strike a deal with its creditors that includes no further austerity measures was rejected by the EU Commission.

Sovereign debt yields remain under upward pressure.  Futures show the 10-year Treasury hovering near 2.5%.  Ten-year Japanese JGB, British gilt and German bunds posted overnight increases of five, four and two basis points, respectively.

West Texas Intermediate oil climbed 1.9% to 61.30 per barrel.  Comex gold rose 0.6% to $1,184.80 per ounce.

Share prices declined 1.3% in Hong Kong, 1.1% in New Zealand (where investors await Thursday’s central bank policy announcement), 0.6% in South Korea 0.2% in China and 0.3% in Japan but also firmed 1.2% in Taiwan, 1.4% in India, 0.9% in Singapore and 0.7% in Indonesia.  Markets have rebounded 1.4% in Italy, 1.0% in Switzerland, 0.9% in Germany, 0.6% in France, 0.5% in Spain and 0.4% in the U.K., but Greek equities stumbled 0.8%.

The Central Bank of Iceland’s seven-day collateralized lending rate was raised by a greater-than-anticipated 50 basis points to 5.75%.  This was the first increase since December 2012.  A released statement included hawkish forward guidance, depicting additional increases in August and subsequent meetings to counter accelerating wage pressures, rising expected inflation and an easing of seven-year-old Icelandic capital controls.

The Bank of Thailand left its seven-day repo rate at 1.5%, its lowest level since mid-2010.

British factory output and French and Italian industrial production data were weaker than forecast.

  • Manufacturing output in the U.K. fell 0.4% in April and posted a greatly shrunken 12-month uptick of 0.2%.  However, industrial production went up 0.4%, beating forecast, and 1.2% from a year earlier.
  • French industrial production sank 0.9% on month in April after stagnating the month before.  Production was also 0.1% softer than in April 2014.
  • Italian industrial production dipped 0.3% on month.  Adjusted for working day variations, production was only 0.1% higher than a year earlier, down from a 12-month rise of 1.4% in March.

In other industrial output figures reported today, Finnish production slid 0.1% in April on top of a 0.4% decline in March.  Compared to a year earlier, output fell 4.0% after dropping 4.8% in the year to March.  Swedish production, increased 2.0% in April, easily surpassing forecasts, and recorded a 12-month gain of 1.5%, twice that in March.  Irish industrial production increased 1.7% on month and 9.7% on year in April. 

Turkish GDP grew 1.3% last quarter, about twice as fast as assumed, and was 2.4% greater than a year earlier.

The Westpac index of Australian consumer sentiment sank 6.9% in June, most in a year and reversing a 6.4% increase May.

Japanese domestic corporate goods prices went up 0.3% in May and posted the same 2.1% on-year decline as booked in April.  In the year to May, export and import prices respectively plunged by 4.4% and 18.0%.

Japanese core domestic private machinery orders increased 3.8% in April, a 4-month high.  This followed a 2.9% increase in March and raised the level to 5.3% above the first-quarter average.  Foreign machinery orders fell 7.0% in contrast.  Such were 43.5% less than in April 2014 and 13.9% below the 1Q mean.

Norwegian consumer prices were 2.1% above a year earlier in May, while producer prices fell 4.8% in the same span.  Greek consumer prices fell 0.8% on month and 2.1% on year last month.  Danish consumer prices were unchanged in May from April but 0.6% firmer than in May 2014. 

The French current account swung EUR 1.8 billion to a EUR 0.4 billion surplus in April.

This is a light day for U.S. data releases, especially compared to earlier this week.

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

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