Focus on Both Data and Central Banks

December 10, 2015

The dollar showed a mixed performance overnight, falling by 1.0% and 0.6% against the Australian and New Zealand dollars, holding steady versus the yen and sterling, and rising 0.7% relative to the euro, 0.4% vis-a-vis the Swiss franc, 0.3% against the yuan and 0.1% versus the loonie.

Japan’s Nikkei lost 1.3%.  Elsewhere in the Pacific Rim, equities fell 0.9% in Hong Kong, 0.8% in Australia, 0.5% in China and 0.2% in Taiwan and New Zealand.  In Europe, stocks bounced back 3.1% in Greece but are down 0.9% in Spain, 0.6% in Britain, and 0.5% in Italy.  The Paris Cac is unchanged, and the German Dax has risen 0.2%.

Ten-year sovereign debt yields slid three basis points in Britain and one bp in Germany.  The 10-year U.S. Treasury yield is unchanged, while Japan’s JGB is a basis point firmer.

WTI crude oil declined 0.5% to $36.99 per barrel.  Comex gold edged down 0.1% to $1,071.33 per ounce.

Australian labor statistics for November way surpassed expectations, as the jobless rate fell to an 18-month low of 5.8%, the participation rate rose 0.3 percentage points to 65.3%, and jobs leaped 71.4K on top of a 56.1K advance in October.  Most of the employment growth has involved full-time positions.

The British goods and services trade deficit widened to a 3-month high of GBP 4.14 billion in October.  The merchandise trade deficit, GBP 11.827 billion, was 34.4% greater than September’s shortfall.  Exports in August-October were 3.2% lower than a year earlier, while imports dropped 0.6%.

French industrial production rose 0.5% in October, doubling the 12-month rate of increase to 3.6%.  French consumer prices dropped 0.2% on month in November and were unchanged from a year earlier.

Canadian house price inflation ticked up to a still-subdued 1.5% in October from 1.3% in September.

Capacity usage in Canada rebounded 0.6 percentage points to 82.0% last quarter but remained below the levels of 82.5% in the first quarter of 2015 and 83.0% in the third quarter of 2014.

U.S. import prices slipped 0.4% last month, with fuel plunging another 2.5% and all other import prices dipping 0.2% on month.  Compared to November 2014, import prices fell 9.4%, while export prices declined 6.3%.  In the year to November 2014, import prices had declined 3.1%, and export prices had fallen 1.7%.

U.S. new jobless insurance claims rose 13K to 282K last week, lifting the 4-week average to 270.75K from 267.75K in the previous 4-week period to November 7.

Japan’s government reported a decline in business sentiment last quarter among all large firms but expectations of higher business confidence three months from now.  Japanese stock and bond transactions generated a JPY 23 billion net capital outflow last week following a JPY 266 billion inflow in the prior week.

Japanese domestic corporate goods prices fell 3.6% between November 2014 and last month.  Import prices plunged 19.0%, and export prices fell 6.7%.

Following a quarterly review, officials at the Swiss National Bank retained the existing policy settings:  a 3-month Swiss Libor target range of minus 0.25% to minus 1.25%, a negative 0.75% sight deposit, and a readiness to stay active intervening in the currency markets to limit franc depreciation but without an automatic currency target to be defended.

The Reserve Bank of New Zealand in a widely expected decision cut the Official Cash Rate by 25 basis points to 2.5%, returning such to the cyclical low.

The Bank of England failed to surprise expectations of no policy change.  The Bank Rate was kept at 0.50% by an 8-1 vote, with Ian McCafferty preferring a 25-basis point hike for the fifth meeting in a row.  The ceiling on the Asset Purchase Program stays at GBP 375 billion, and a released statement suggests that considerable further time could elapse before rate normalization begins and implies that the eventual upward path in rates will be quite gradual.

Serbia’s central bank interest rate was left unchanged at 4.5% versus 8% at the start of this year.

Officials at the Bank of Korea also kept policy unchanged.  It’s base rate remains at 1.5% versus 2.0% at the start of 2015.

The head of the Bank of Finland and a member on the ECB Governing Council warned of more reflationary actions to promote a return to in-target inflation.  His remarks depressed the euro.

Turkish GDP rose 4.0% on year last quarter, most since 1Q14.

In the year to November, consumer prices rose 2.8% in Norway, 0.3% in Denmark and 0.1% in Sweden, while sliding 0.7% in Greece and 0.2% in Ireland.

Greek unemployment remained at a sky-high 24.6% in September, and its industrial output contracted 1.9% between October 2014 and October 2015.

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

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