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January 31, 2014

Japan’s Inflation Accelerates

Japan’s inflation accelerated in December, industrial output gained and a measure of demand for workers strengthened, signaling gains for Prime Minister Shinzo Abe’s campaign to end two decades of stagnation.

Prices excluding fresh food increased 1.3 percent from a year earlier, the statistics bureau said today in Tokyo, above a median estimate of 1.2 percent in a Bloomberg survey of 32 economists. Industrial production rose 1.1 percent from the previous month, while the number of jobs for every seeker rose to 1.03, exceeding 1 for the first the time since October 2007.

The economy’s next tests are spring wage negotiations among major employers and workers, and an April sales-tax increase that threatens to hurt consumer spending. Without pay gains that compensate for inflation — so far driven by higher energy bills due to a weaker yen and Japan’s nuclear shutdown — households face falling purchasing power.

Bloomberg

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U.S. Dollar Higher before Spending Data

The dollar headed for a weekly gain versus a basket of its peers before data forecast to show Americans increased spending for an eighth month, adding to evidence the U.S. economy is growing.

The greenback held its biggest advance since October versus the euro after data yesterday showed U.S. gross domestic product expanded for an 11th straight quarter. The Federal Reserve said this week it would reduce stimulus for a second month. The yen pared its biggest monthly advance against the dollar since April 2012 as concern eased about a selloff in emerging markets. New Zealand’s dollar was poised for a third weekly drop after the central bank said the “high exchange rate” is unsustainable.

“The U.S. expansion has been confirmed, and that’s been taken as a positive for the dollar,” said Yasuhiro Kaizaki, the vice president for global markets in New York at Sumitomo Mitsui Trust Bank Ltd. “Emerging markets have calmed down, triggering a recovery in risk appetite that’s helped the dollar.”

Bloomberg

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AUD/USD up near 0.88 as Risk Aversion Eases

Australia’s dollar was set for its first five-day gain in three weeks and bond yields rose from the lowest in three months after Asian stocks extended a global rally on easing emerging market concerns.

The Aussie held the biggest increase since August 2011 versus its New Zealand counterpart ahead of a Reserve Bank of Australia meeting next week when 95 percent of swaps trader expect policy makers to keep rates on hold at 2.5 percent. The kiwi currency was poised for its biggest weekly loss in more than a month after Reserve Bank of New Zealand Governor Graeme Wheeler said the currency’s level is a headwind for growth and unsustainable in the long run.

“Interest rates in Australia have bottomed; we don’t expect another cut by the RBA, and the next move will be a hike before the end of the year,” said Thomas Averill, a managing director in Sydney at Rochford Capital, a currency and rates risk-management company. “The Aussie had a big whack already against most major currencies. We expect the low in the Aussie to be not too far from where we are at the moment.”

Bloomberg

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December 2, 2013

French Manufacturing Continues to Dissapoint

Manufacturing in the euro zone accelerated at its fastest pace in two and a half years in November, helped by a ramp-up in production. But disappointing data from France and Spain added to concerns about the health of the region’s wider economy.

The Markit Manufacturing Purchasing Managers’ Index (PMI) for the euro zone came in at 51.6 in November, compared with 51.3 the previous month. A reading over 50 marks expansion.

Higher levels of manufacturing production, new orders and new export business helped the figure hits its highest level since June 2011. November’s growth marked the fifth consecutive month of expansion in the sector, and was higher than higher initial estimates of 51.5.

However, two of the euro zone’s largest economies posted a slide in activity over the month, with France’s PMI coming in at 48.4 (a 5-month low) and Spain’s falling to 48.6 (a 6-month low).

via CNBC

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Morgan Stanley Warns European Stocks Cooling Down

European shares may be the consensus pick for strong gains in 2014, but Morgan Stanley has downgraded the region’s equities to Neutral, expecting them to run out of steam.

While the bank prefers developed markets’ stocks over their emerging market peers, it believes Europe’s risk-reward profile is the worst among its peers Japan and the U.S., both of which it rates at Overweight.

“Europe remains under the threat of prolonged stagnation as deflation and low growth are likely to become entrenched in the absence of vigorous action from European policy makers,” it said in a note, calling its concern “Japanification,” a reference to the long economic stagnation in Japan.

via CNBC

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November 29, 2013

Italian Unemployment Stable at 12.5 Percent

Italy’s seasonally adjusted unemployment rate was stable in October at a record 12.5 percent, while the youth jobless rate rose to a new high of 41.2 percent, statistics office ISTAT said.

October’s headline jobless figure was in line with the median forecast of 12.5 percent in a Reuters survey.

The employment rate rose slightly to 55.5 percent from 55.4 percent the previous month.

Unemployment has followed an upward trend since early 2011 as Italy has languished in its longest post-war recession.

Both overall unemployment and the youth jobless rate, measuring job-seekers between 15 and 24 years old, have reached their highest levels since ISTAT began recording the data in 1977.

Most analysts believe Italy is gradually moving towards a recovery but conflict between the partners in Enrico Letta’s left-right governing coalition has complicated efforts to reform the economy and boost growth.

via Reuters

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November 6, 2013

UK Industrial Output Beats Expectations in September

British industrial output grew more strongly than expected in September as it bounced back from a fall the previous month, providing some reassurance that the country’s economic recovery is not being driven only by consumption.

Output in the industrial sector – which makes up about a sixth of Britain’s economy – climbed 0.9 percent during the month and was pushed up most strongly by manufacturing, the Office for National Statistics said.

Economists had expected a rise of 0.5 percent, according to a Reuters poll of economists.

Sterling jumped to a one-week high against the dollar and British government bond prices fell as investors took the data as another sign that the Bank of England might bring forward its timeframe for raising interest rates.

But economists cautioned against reading too much into Wednesday’s figures and Britain’s economy was still being driven by consumption and the services sector.

via UK industrial output rebounds in September | Reuters

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October 30, 2013

Japan’s Factory Output Higher But Remain Below Expectations

Japan’s industrial output rose 1.5 percent in September from the previous month, official data on Wednesday showed.

The figure was lower than a Reuters forecast for a 1.8 percent increase, but was still a bounce from the 0.9 percent decline in August.

The government also raised its assessment of output for the first time in six months.

CNBC

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August 9, 2013

Chinese Data allows more room to Boost Stimulus

China’s inflation stayed subdued in July while factory-gate prices fell for a 17th month, giving Premier Li Keqiang more room to boost stimulus should an economic slowdown deepen.

The consumer price index rose 2.7 percent in July from a year earlier, the National Bureau of Statistics said today in Beijing. That was less than the 2.8 percent median estimate in a Bloomberg News survey and the government’s full-year target of 3.5 percent. Producer prices fell 2.3 percent after a 2.7 percent drop the previous month.

The reports reflect a growth deceleration that’s left the world’s second-largest economy poised for the weakest expansion in 23 years. China last month announced what Bank of America Corp. called a “small stimulus” while pursuing reforms that include ordering more than 1,400 companies in 19 industries to cut excess production capacity this year.

Bloomberg

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July 10, 2013

Japan Consumer Confidence Falls in June

Japanese consumer confidence slipped in June for the first time in six months as consumers reported slowing income growth and rising prices, exposing the challenges to Prime Minister Shinzo Abe’s plan to revive the economy by generating inflation.

Household sentiment fell 1.4 points from May to 44.3 in June, with the mood worsening for all four components — livelihood, income, jobs and spending appetite for durable goods, the government survey showed.

The survey showed 83.9 percent of respondents expect prices to rise a year from now, up 0.8 point from the previous month to the highest ratio in nearly five years.

Abe has pursued a policy of aggressive stimulus, dubbed Abenomics, to revive the economy and end 15 years of deflation. The early signs have been encouraging, but the plan in part relies on growth boosting wages — something yet to be seen.

Indeed, the survey’s index of income growth fell 0.6 point to 41.6 in June, the first fall in six months.

via Reuters

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This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

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