Weaker Yen in Early Tuesday Trading

March 13, 2018

Ahead of the release of U.S. consumer price data, the yen has dropped 0.8% against the dollar to a near 2-week low and 3-week low versus the euro. Japanese producer prices and its tertiary index were released overnight.

  • Japanese domestic corporate goods prices were unchanged in February, trimming their 12-month rate of increase to 2.5% from 2.7% in January and 3.0% in December. Export and import prices recorded respective monthly declines of 1.1% and 0.1%, and on-year export and import price inflation both fell, too.
  • After stagnating in December, the tertiary index slumped 0.6% on month and was 1.6% higher than a year earlier in January. That’s still better than the calendar year increases of 0.9% in 2015, 0.7% in 2016 or 0.7% in 2017. The tertiary index measures service sector activity.
  • Whereas U.S. stocks weakened on Monday, the Japanese Nikkei had advanced 1.7%, and it climbed another 0.7% today. Meanwhile, the 10-year Japanese JGB yield remained steady at 0.04%.

Against other major currencies, the dollar is unchanged versus the euro and yuan, up by 0.3% relative to the loonie, 0.2% vis-a-vis the peso and 0.1% versus the Swiss franc, Aussie dollar and sterling. There’s been a 0.4% decline relative to the kiwi.

Gold and oil each edged down 0.1% in value overnight.

Ten-year German bund and British gilt yields are a basis point lower.

In the Pacific Rim, equities fell 1.4% in Indonesia, 0.5% in China, 0.4% in Australia, and 0.2% in India but climbed by 0.9% in Taiwan and 0.4% in South Korea. Singapore’s stock market also went up 0.4%, despite the the killing by President Trump of Broadcom’s plan to acquire Qualcom. As he did when imposing tariffs on imported steel and aluminum last week, President Trump defended this protective action on national security grounds.

The NAB indices of Australian business conditions and business confidence respectively rose to a record-high reading of 21 and fell to a 3-month low of 9 in February. A separate statistical release indicated a 1.1% month-on-month slide in Aussie home loans in January on top of a 2.3% drop in December.

New Zealand food price inflation collapsed to 0.1% in February from 0.8% in January.

South African factory output fell 1.6% in January, more than reversing December’s rise. Factory output in Hong Kong was only 0.6% greater last quarter than a year earlier. That was similar to an average 0.4% increase in all of 2017. Producer prices in Hong Kong posted an average 3.8% rise last year.

Between February 2017 and February 2018, consumer prices rose 1.1% in Spain, 4.7% in Romania, and 0.6% in Portugal.

The British government’s annual spring economic forecasts will be released today.

The U.S. February consumer price report conformed to expectations, rising 0.2% on month. On-year CPI inflation edged up 0.1 percentage point to a 3-month high of 2.2%. Food and energy prices were subdued with monthly changes of zero percent and +0.1%. Core CPI inflation, which excludes food and energy held at 1.8% for a third straight month. U.S. real average weekly earnings growth likewise held at 0.6% for a third straight time.

Copyright 2018, Larry Greenberg. All rights reserved. No secondary distribution without express permission.


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