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Dollar Fighting Back Versus Euro As Focus Turns To Fed
The dollar surged ahead versus the euro Tuesday morning in New York as the Federal Reserve prepared to meet amid growing anxiety that the economic growth seen over the summer may not be sustainable without continued support measures.
With the US consumer still on edge as unemployment approaches 10 percent, many analysts are pointing out that while the third quarter figures on the economy are somewhat encouraging, organic growth is unlikely until the jobs situation improves.
The safe haven dollar has managed recover versus the euro over the past week, prompting the rally in global equities to run out of steam.
The dollar jumped to a monthly high of 1.4623, rising more than a penny even as traders considered news that the European Commission expects the euro area economy to emerge from recession in the second half of 2009.
However, the economy is set to contract 4% for 2009 as a whole.
Joaquin Almunia, Commissioner for Economic and Monetary Affairs said, "The EU economy is coming out of recession. This owes much to the ambitious measures taken by governments, central banks and the EU that have not only prevented a systemic meltdown but have kick-started the recovery. However, the road ahead is a challenging one."
The dollar firmed up a bit versus the yen, moving back above the 90 mark. The pair has been choppy over the past few weeks, with the buck finding a measure of support after testing a 1995 low in October.
Meanwhile, the dollar was steady versus its Australian counterpart even after the RBA raised its interest rate for the second straight session. The dollar rose to .8920 versus the aussie, but leveled off to .8965 approaching 8 am ET.
In October, Australia became the first G-20 member nation to hike its benchmark interest rate since the onset of the financial crisis in late 2008.
The dollar hit a weekly high versus the sterling, rising to 1.6260 before hitting resistance. On a longer term basis, the pair has been moving between 1.5700 and 1.6700 for months.
All eyes will be on Washington, DC tomorrow as the Fed wraps up its latest policy meeting. While Ben Bernanke and company are universally expected to maintain the key interest rate near zero, traders will be paying close attention to the accompanying statement, looking to see whether rates will be left alone "for some time to come," as the central bank has recently assured.
Looking at today's economic calendar, the government is releasing September factory orders at 10 am ET. Economists are looking for a September gain of 1 percent.
News are provided by InstaForex.
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Japanese Consumer Prices Fall Further, Unemployment Drops Unexpectedly
Consumer prices in Japan continued to fall at a rapid pace in October, official data showed on Friday, giving credence to the deflationary concerns of the government. However, a surprise decline in unemployment, along with household spending data put more of a positive, yet momentary, spin on things for the beleaguered economy.
Core consumer prices, which exclude fresh food from the price basket, dropped 2.2% in October from a year earlier, but slower than a 2.3% fall in the previous month, the Ministry of Internal Affairs and Communication reported. Economists had expected a 2.4% decline. General consumer prices dropped 2.5% year-on-year in October, after a 2.2% fall in prices in each of the three preceding months.
On November 20, the Cabinet Office declared that the economy is in deflation, the first official announcement of deflation since mid-2006. In its monthly economic report for November, the government said, "Recent price developments show that the Japanese economy is in a mild deflationary phase." The report said the economy is picking up, but faces difficult situation such as a high unemployment rate.
Last week, the Organisation for Economic Co-operation and Development warned against lingering deflation in the economy and said an increase in the central bank's bond purchases would help in battling deflation. According to the Bank of Japan's forecast in October, the CPI excluding fresh food, would fall 1.5% in fiscal 2009 and would drop 0.8% in fiscal 2010 and a 0.4% decline in fiscal 2011.
On a monthly basis, overall consumer prices dropped 0.4%, and excluding fresh food, prices fell 0.1%.
BNP Paribas economist Azusa Kato said that the slowing in the rate of decline in the core CPI was simply the result of a 'technical error', namely the waning base effect from surging petroleum product prices through August of last year. Excluding this, price deflation actually broadened in October, he pointed out.
Meanwhile, the CPI in the Tokyo area dropped 2.2% on year in November and fell 0.2% on a monthly basis. The core CPI fell 1.9% on a yearly basis, but slower than a 2.3% decline anticipated by economists. Month-on-month, core consumer prices were down 0.1%.
"Despite the economic recovery that has been driven by fiscal stimulus and rising exports to emerging economies, downward pressures on prices have hardly abated and the supply-demand gap remains quite large," Kato said. Even after the disappearance of techinical factors around February, BNP Paribas expects that a minus inflation rate of more than -1% should take root for a while, as deflationary expectations are taking hold at the consumer and corporate level.
On a more encouraging note for the economy, unemployment levels continued to fall against expectations. The unemployment rate stood at a seasonally adjusted 5.1% in October, down from 5.3% in the previous month, the Ministry of Internal Affairs & Communications reported. Economists had expected the unemployment rate to rise to 5.4%. The jobless rate declined for the third consecutive month.
The total number of unemployed persons declined to 3.36 million from 3.52 million. At the same time, the number of employed persons decreased to 62.44 million from 62.64 million in the prior month, while total labor force strength slid to 65.82 million from 66.19 million.
In other news, real household spending in Japan grew 1.6% year-on-year in October following the 1% increase in the previous month. Economists had expected real household spending to rise 0.7%.
Household spending excluding that on housing, purchase of vehicles, money gifts and remittance climbed 0.7%. Spending on medical care surged 11.4% annually in October, while spending on transportation & communication rose 4.7%. On the other hand, household spending on education declined 4.6%.
Spending among workers' households increased 0.6% from the previous year, the same rate of growth as in the preceding month. In nominal terms, total household spending dropped 1.3%.
Retail sales figures for October were also released on Friday, with sales falling 0.9% year-on-year to JPY 10.83 trillion in October, slower than the 1.3% decline in the preceding month. Economists had expected sales to drop 1.6%. This marks the fourteenth straight month in which retail sales have fallen on an annual basis.
"The outlook for consumption is not bright," BNP Paribas economist Hiroshi Shiraishi said. "Employee income, the key to consumption, is unlikely to improve anytime soon as businesses continue to cut costs in order to cope with chronically low operating rates." BNP Paribas expects GDP-based consumption, which increased at a solid pace in the second and third quarters to start to lose momentum from the final quarter of the year.
News are provided by InstaForex.
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Philippine Consumer Prices Continue To Rise In November
Philippines' consumer price inflation picked up in November driven by higher food, beverage and tobacco prices, official data showed on Friday.
The National Statistics Office said that consumer prices in the Philippines grew 2.8% year-on-year in November, faster than the 1.6% rise in the previous month. The headline inflation rate came in line with economists' expectations. Excluding selected food and energy items, the core inflation rate remained unchanged from October at 2.7%.
The latest increase in consumer prices was attributed to an acceleration in the inflation rate of the heavily weighted food, beverages & tobacco index, up 4.8% in November compared to the 3.7% increase in October. Prices of clothing increased 2.1%, while services prices and prices of miscellaneous items increased 0.2% and 1.9%, respectively. On the other hand, the fuel, light & water index slid 1.1%, slower than the 3.6% fall in the preceding month.
The annual inflation rate in the National Capital Region (NCR) grew 2% in November, adding to the 1.1% increase in October. This was brought about by the higher prices of clothing and slower rate of decline in the prices of fuel, light & water and services, the statistical office said.
In Areas Outside the National Capital Region (AONCR), consumer prices were up 3.1% on year, faster than the 1.9% increase in the prior month. This was mainly due to increases in the food, beverages & tobacco index, fuel, light & water index, and services index. Among the regions, annual inflation rate was highest in Cagayan Valley at 5.6%, while the lowest rate continued to prevail in Central Visayas at 1.7%.
On a monthly basis, consumer prices increased 0.6% on a national level in November, in line with expectations, and adding to the 0.6% growth in October.
The Philippine economy consolidated growth in the third quarter, rising 0.8% year-on-year, the same growth rate as in the second quarter. This compares to the 4.6% growth seen in the third quarter of last year.
News are provided by InstaForex.
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Yen Soars To New Multi-day Highs Against Majors On Weak Equities
Wednesday, the yen rose to new multi-day highs against its major counterparts as a fall in global stock prices prompted investors to seek the safety of the Japanese currency.
World stock markets extended their losses today as Japan's much weaker-than-expected economic growth and rising debt loads around the world added to concerns the global recovery was faltering.
Investors in Asia were rattled after Japan downwardly revised its economic growth for the third quarter today to reflect a marked worsening of domestic demand in the country.
The Cabinet Office announced that gross domestic product expanded just 0.3% quarter-on-quarter in the third quarter, revised down from the 1.2% growth estimated initially.
Economists had expected the GDP growth rate to be revised to 0.7%.
After falling sharply Tuesday, European markets added to their losses, with benchmarks in Germany, France and Britain down 0.1 percent or more.
Earlier in Asia, Japan's Nikkei 225 stock average fell 135.75 points, or 1.3 percent, to 10,004.72.
Hong Kong's key index shed 318.76, or 1.4 percent, to 21,741.76, and Shanghai's benchmark was off 1.7 percent at 3,239.57.
Australia's market lost 0.7 percent, India's stock measure declined 0.4 percent and Singapore's market was off 0.3 percent.
The South Korean market defied the downdraft and gained 0.4 percent to 1,634.17, helped after the International Monetary Fund raised the country's economic growth forecast for 2010. Taiwan's market also rose 0.4 percent.
Against the US dollar, the Japanese yen traded higher during early deals on Wednesday. At 3:35 am ET, the yen climbed to a 6-day high of 87.49 against the dollar, compared to 88.45 hit late New York Tuesday. The next upside target level for the yen is seen around 87.1.
The Japanese unit that closed Tuesday's North American session at 130.04 against the European currency reached a 12-day high of 128.80 at 3:55 am ET Wednesday. If the yen gains further, 128.0 is seen as the next target level.
Germany's Federal Statistical Office said today in a final report that the consumer price index or CPI increased 0.4% year-on-year in November, faster than the flat reading in the previous month. The consumer price inflation in November was revised from 0.3% estimated initially. The consumer prices increased for the first time since June 2009.
French trade deficit widened to EUR 4.39 billion in October from EUR 2.80 billion deficit in September, data released by the Customs Office showed today. Economists had forecast deficit to narrow to EUR 2.3 billion.
Against the Japanese currency, the British pound edged higher during today's early deals. At 3:40 am ET, the yen rose to an 8-day high of 142.05 against the pound, compared to Tuesday's closing value of 144.07. On the upside, 141.2 is seen as the next target level for the yen.
Consumer confidence in the United Kingdom held firm in November led by greater optimism about the future economic situation, the results of a survey showed today.
The Nationwide Building Society announced that the consumer confidence index stood at 73 in November, unchanged from the upwardly revised reading for October. The expectations index rose to 108 from 107 and this was offset by a decline in the present situation index by 2 points to 20. The index measuring spending intentions rose to 106 from 104.
The yen that closed Tuesday's New York deals at 86.15 against the Swiss franc hit a 12-day high of 85.30 at 3:50 am ET Wednesday. The franc-yen pair is currently trading at 85.63 with 84.7 seen as the next target level.
Switzerland's unadjusted jobless rate rose to 4.2% in November from 4% recorded in October, the State Secretariat for Economic Affairs said today. That was in line with economists' expectations. At the same time, the seasonally adjusted jobless rate stood stable at 4.1%.
Across the Atlantic, the U.S. wholesale inventories report for October is due in the North American session.
News are provided by InstaForex.
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European Currency Plunges To 2 1/2- Month Low Against US Dollar
During early deals on Tuesday, the European currency plunged to a 2 1/2-month low against the US dollar and traded near a 1-month low versus the British pound ahead of the German and Euro-Zone ZEW economic sentiment survey results.
At 5:00 am ET, the Centre for European Economic Research or ZEW is expected to release economic sentiment survey results for Germany. The economic sentiment indicator for Germany is seen at 50 in December, down from 51.1 in the previous month. The current conditions index is expected to rise to minus 60.1 from minus 65.6. Meanwhile, the economic sentiment indicator for the Eurozone is seen at 49.9 in December compared to 51.8 in November.
While, the euro pared its Asian session's gains against the Japanese yen it edged higher against the Swiss franc.
Against the US dollar, the European currency traded down during early deals on Tuesday. At 4:25 am ET, the euro-dollar pair declined to 1.4548, compared to 1.4658 hit late New York Monday. This set the lowest mark for the pair since October 2, 2009. The next downside target level for the pair is seen around 1.437.
The 16-nation currency that closed Monday's North American session at 0.8988 against the British pound plunged to a 26-day low of 0.8946 at 3:50 am ET Tuesday. If the euro-pound pair falls further, 0.889 is seen as the next target level.
House prices in the United Kingdom rose for the fourth straight month in November, a barometer of sentiment in the residential property market showed today.
The house price balance index from the Royal Institution of Chartered Surveyors (RICS) increased to 35 points in November from 34 points in October. Economists had expected a reading of 39 points. The survey subtracts the percentage of surveyors reporting falling prices from those reporting rising prices.
Against the Swiss franc, the single currency edged higher during Tuesday's early deals. At 1:30 am ET, the euro-franc pair reached a high of 1.5135, compared to Monday's closing value of 1.5123. On the upside, 1.515 is seen as the next target level for the pair.
Switzerland's State Secretariat for Economic Affairs announced today its latest economic forecasts. Experts now see a 1.6% decline in gross domestic product this year, slightly less than the 1.7% fall forecast in September. Meanwhile, the growth forecast for 2010 was hiked to 0.7% from 0.4%. The Swiss economy, which emerged from recession in the third quarter, is expected to grow 2% in 2011.
The euro lost ground after hitting a high of 130.41 against the yen at 12:00 am ET Tuesday. Currently, the euro-yen pair is trading at 129.86 with 129.1 seen as the next target level. The pair closed Monday's New York deals at 129.92.
Across the Atlantic, the U.S. PPI and industrial production reports for November, NAHB housing market index and the results of the New York Federal Reserve's empire state manufacturing survey for December and the Treasury Department's report on the flows of financial instruments into and out of the U.S. for October have been slated for release.
News are provided by InstaForex.
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Pound Spikes Down Against Majors.
The British pound staged a sharp fall against its major counterparts at 2:00 am ET Thursday. The pound-dollar pair thus declined to a 2-day low of 1.6217, compared to 1.6336 hit late New York Wednesday. The next downside target level for the pair is seen around 1.621.
Meanwhile, the British currency is currently trading at 0.8885 against the euro and 1.6971 versus the franc, compared to today's early Asian session's new multi-week highs of 0.8854 and 1.7030 respectively. This may be compared to yesterday's closing values of 0.8898 against the European currency and 1.6970 versus the Swiss franc.
Against the Japanese yen, the pound is now quoted at 145.86, compared to Wednesday's closing value of 146.67.
News are provided by InstaForex.
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Aussie Advances To New Multi-day Highs Against Most Majors
The Australian dollar advanced to a new multi-day highs against the currencies of Japan, US, Europe and New Zealand as a surge in local stocks encouraged investors to bet on higher-yielding currencies.
On the equity front, the Australian market ended in the positive territory today having reopened after 4 holidays, taking cues from Wall Street where the major averages ended higher in yesterday's trading session.
The benchmark S&P/ASX200 Index advanced 54.20 points, or 1.13% to close at 4,845, while the All-Ordinaries Index ended at 4,857, representing a gain of 53.40 points, or 1.11%.
During early trading on Tuesday, the Australian dollar rose to an 8-day high of 1.6133 against the euro. This may be compared with yesterday's closing value of 1.6216. On the upside, 1.608 is seen as the next target level.
The Aussie showed strength against the Japanese yen during Tuesday's early trading. At about 4:05 am ET, the Aussie-yen pair reached an 18-day high of 81.98, with 82.8 seen as the next upside target level. At Monday's New York session close, the pair was quoted at 81.30.
In early trading on Tuesday, the Australian dollar advanced to an 12-day high of 0.8952 against the US currency. The next upside target level for the aussie-greenback pair is seen at 0.901. The Aussie-dollar pair closed Monday's deals at 0.8872.
From U.S., the S&P/Case-Shiller home price index, is scheduled to be released at 9 am. Economists expect a 7.30% year-over-year decline in the 20-city composite house price index for October following a 9.36% drop in the previous month.
The Conference Board is scheduled to release its consumer confidence report for December at about 10 am ET. The report, is expected to show that the consumer confidence index rose to 53 in December.
The Australian currency edged up against the New Zealand dollar during early Asian deals on Tuesday. At 1:55 am ET, the aussie advanced to a 6-day high of 1.2566 against the kiwi, compared to 1.2537 hit late New York Wednesday. The next upside target level for the Aussie-kiwi pair is seen around 1.262. As of now, the pair is trading at 1.2558.
The Australian dollar also traded up against its Canadian counterpart during this time period and hit as high as 0.9323 by 4:10 am ET. This may be compared with yesterday's closing value of 0.9254. On the upside, 0.951 is seen as the next resistance level.
News are provided by InstaForex.
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Dollar Rises To 3-day High Against Yen
The dollar that fell to 92.12 against the yen at 1:25 am ET Thursday rose sharply around 1:45 am ET. As of now, the dollar-yen pair is trading at a 3-day high of 92.98 with 93.2 seen as the next target level.
Meanwhile, the dollar also extended its Asian session's uptrend against the currencies of Europe, Switzerland and U.K. At present, the dollar is worth 1.4346 per euro, 1.5920 against the pound and 1.0333 against the franc.
News are provided by InstaForex.
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IEA Keeps 2010 Global Oil Demand Unchanged.
Friday, the International Energy Agency kept its global oil demand forecast for the current year unchanged from its previous forecast in December. The estimate for the previous year was also kept unchanged.
In its latest Oil Market Report, the Paris-based IEA said oil demand would be 86.3 mb/day in 2010, up from 84.9 mb/day estimated for 2009. The agency said growth is driven by non-OECD countries, most notably in Asia. Oil demand recovery in the OECD will likely remain sluggish, despite the recent cold weather, it added.
Moreover, the report showed that crude oil prices surged to 15-month highs in early January on very cold winter weather in much of the northern hemisphere and escalating geopolitical tensions in key oil producing countries. At their peak, prices had jumped by around $10-12/bbl from December lows. Prices have since eased, last trading in a $78-80/bbl range.
OPEC-12 crude output rose 75 kb/day to 29.1 mb/day in December, resulting in effective spare capacity of 5.4 mb/day. Further, the agency said global supply rose 270 kb/day in December to 86.2 mb/day, on both higher OPEC and non-OPEC output.
News are provided by InstaForex.
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Hi there,
Today's market review depicts following elementary news:
On Friday, US data releases were mixed though were generally disappointing at the margin. December CPI was slightly below forecast, rising just 0.1% m/m with core also up 0.1% m/m though year-on-year comparisons ticked sharply higher as a result of higher oil prices.
Friday’s Lows & High
EUR/USD – 175 pips (1.4336-1.4511); AUD/USD – 99 pips (0.9215-0.9314);
USD/CAD – 20 pips (1.0270-1.0290); GBP/USD – 34 pips (1.6288-1.6322).
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Thank you for your interesting review. :smiley:
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Euro Mixed Against Majors Amid German PPI.
The German PPI for December was released at 2:00 am ET. Amid the report, the euro showed mixed trading against other major currencies. While the euro gained against the franc, it fell against the dollar and the yen. Against the pound, the euro was little changed.
As of now, the euro is worth 1.4203 against the greenback, 129.43 versus the yen, 1.4744 versus the Swiss franc and 0.8709 versus the pound.
News are provided by InstaForex.
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European Economics Preview: U.K. Public Sector Finance Data Due
The United Kingdom is scheduled to release public sector finance and money supply data on Thursday. The Flash Purchasing Managers' Index reports for major Eurozone economies are also due.
At 3:00 am ET, the Swiss central bank is scheduled to release money supply data for December. M3 money supply had increased 7.6% annually in November.
The release of the Flash Purchasing Managers' Index reports for major Eurozone economies is set to start at 3.00 am ET. The first one expected to hit the wires is the Flash French PMI for both manufacturing and service sectors. The manufacturing PMI is forecast to remain unchanged at 54.7 in January, while the services PMI is expected to rise to 59 from 58.7.
Thereafter, Flash German PMI data is due at 3.30am ET. Economists expect manufacturing PMI to climb to 52.9 from 52.7, while the services PMI is seen at 53, up from 52.7.
In the meantime, the Statistics Denmark is expected to release consumer sentiment data for January. The index is seen at minus 0.8, up from minus 3.6 in the preceding month.
Consumer sentiment data is also due from the Dutch statistical office, along with unemployment figures. Economists expect the jobless rate to edge up to 5.4% in the October to December period.
At 4:00 am ET, Eurozone's PMI report is also due. The manufacturing PMI is expected to stand at 51.9 compared to 51.6 in December, while the services PMI is forecast to rise to 53.8 from 53.7.
The U.K.'s money supply data is due from the Bank of England at 4:30 am ET. M4 money supply is forecast to rise by 8.9% on a yearly basis and by 0.9% on a monthly basis. The U.K.'s public finance report is also due at the same time. Public sector net cash requirement is seen at GBP 25.5 billion compared to GBP 14.7 billion in November.
Afterwards at 6:00 am ET, the Confederation of British Industry is set to release January's Distributive Trade Survey results.
News are provided by InstaForex.
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Eurozone Industrial New Orders Grow More Than Initially Estimated
Monday, Eurozone statistical office Eurostat revised industrial new orders data after Germany's Federal Ministry of Economics and Technology revised the country's new order data on January 22 to show better growth figures.
According to the revised report, Eurozone industrial new orders rose 2.7% month-on-month in November after a revised fall of 2.1% in October. The most striking improvement was the slowdown in annual decline to just 0.5% from October's 14.5% fall.
In an earlier release published on January 22, the Eurostat said industrial new orders rose 1.6% month-on-month in November, taking the annual decline to 1.5%. On the same day, official report showed that new orders to German industries grew 2.8% month-on-month in November, a revision from just 0.2% rise reported on January 7. It follows a 1.9% decline in October. November's annual growth was revised to 4.5% from 1.8% rise initially published.
Today's report showed that new orders for intermediate goods increased by 2.3% in the euro area and those for capital goods rose by 1.1%. Orders for durable consumer goods gained 0.6% and those for non-durable consumer goods grew by 0.8%.
Industrial new orders for EU27 rose 2.6%, a revision from 1.8% growth reported initially. It follows a revised 2.1% decline in October. Annually, the decline in November was 1.2%, revised from 2% fall previously reported and follows a revised 14.2% drop in October.
Among the member states for which data were available, total manufacturing orders rose in fifteen and fell in eight. The highest increases were registered in Austria, Estonia and Greece, while the largest decreases were in Hungary, Ireland and Bulgaria.
News are provided by InstaForex.
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Eurozone Industrial New Orders Grow More Than Initially Estimated
Monday, Eurozone statistical office Eurostat revised industrial new orders data after Germany's Federal Ministry of Economics and Technology revised the country's new order data on January 22 to show better growth figures.
According to the revised report, Eurozone industrial new orders rose 2.7% month-on-month in November after a revised fall of 2.1% in October. The most striking improvement was the slowdown in annual decline to just 0.5% from October's 14.5% fall.
In an earlier release published on January 22, the Eurostat said industrial new orders rose 1.6% month-on-month in November, taking the annual decline to 1.5%. On the same day, official report showed that new orders to German industries grew 2.8% month-on-month in November, a revision from just 0.2% rise reported on January 7. It follows a 1.9% decline in October. November's annual growth was revised to 4.5% from 1.8% rise initially published.
Today's report showed that new orders for intermediate goods increased by 2.3% in the euro area and those for capital goods rose by 1.1%. Orders for durable consumer goods gained 0.6% and those for non-durable consumer goods grew by 0.8%.
Industrial new orders for EU27 rose 2.6%, a revision from 1.8% growth reported initially. It follows a revised 2.1% decline in October. Annually, the decline in November was 1.2%, revised from 2% fall previously reported and follows a revised 14.2% drop in October.
Among the member states for which data were available, total manufacturing orders rose in fifteen and fell in eight. The highest increases were registered in Austria, Estonia and Greece, while the largest decreases were in Hungary, Ireland and Bulgaria.
News are provided by InstaForex.[/QUOTE]
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Greenback Mixed Ahead Of Jobless Claims
The dollar remained mixed versus other major currencies Thursday morning in New York, holding yesterday's gains versus the euro and yen while ceded a bit of ground against the sterling and loonie.
Traders were looking ahead to key data on the jobs situation and manufacturing sector, following Wednesday's decision by the Federal Reserve to maintain its key lending rate near zero.
The Labor Department is due to release its customary jobless claims report for the week ended January 23rd at 8:30 AM ET. Economists expect a decline in claims to 450,000. Lingering weakness in the jobs market compelled the Fed to reiterate it will keep rates at record low levels for an extended period yesterday.
The Commerce Department is set to release its durable goods orders report, which gives the value of orders placed for goods designed to last for more than 3 years, at 8:30 AM ET. Economists look forward to a 2% increase in durable goods orders for December.
The dollar leveled off versus the euro after hitting a fresh 5-month high of 1.3935 last night. Against the yen, the buck was steady at Y90.25, an improvement from a monthly low near Y89 set earlier in the week.
The number of unemployed in Germany rose in January, ending declines in past six consecutive months, as heavy snowfall and freezing temperatures hurt the country's labor market.
The seasonally adjusted number of unemployed increased by 6,000 month-on-month to 3.43 million in January. But, the increase was less than the expected 15,000. The rise in January follows a drop of 3,000 in the previous month.
Eurozone economic sentiment rose for the tenth successive month, a survey conducted by the European Commission showed Thursday. The economic confidence index stood at 95.7 in January, up from a revised reading of 94.1 in the previous month. The expected reading was 92.3.
Meanwhile, retail sales in Japan fell 0.3 percent on year in December, the Ministry of Economy, Trade and Industry said on Thursday. That missed forecasts for a 0.3 percent annual gain after the revised 1.1 percent contraction in November.
The dollar continued to show a lack of direction versus the sterling, easing to 1.6265. The pair has bounced back and forth between 1.6100 and 1.6300 for the past week.
With commodity prices stabilizing this morning, the dollar gave back some of its recent gains versus its Canadian counterpart, slipping a Canadian penny from yesterday's monthly high near C$1.0680.
News are provided by InstaForex.
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Eurozone Inflation, Jobless Rate Rise
Eurozone inflation and unemployment rate rose less than expected, giving time to the central bank to pursue a gradual exit from stimulus measures.
Friday, the flash estimate from the Eurostat showed that consumer price inflation in the euro area edged up to 1% in January from 0.9% recorded in December. Economists had forecast the rate to rise to 1.2%. The statistical agency is set to release a final report on January inflation on February 26.
According to economists, the January increase was led by energy prices. However, the Eurozone inflation is much lower than the rates of nearly 3% in the U.K. and the U.S., due to a stronger euro.
"This increase is essentially due to energy prices, which are now clearly rising on a year-on-year basis," said ING economist Peter Vanden Houte. The economist expects headline inflation to move further moderately as the decline in food prices eases. However, underlying price pressures remain muted and this will allow the European Central Bank to wait-and-see until the fourth quarter of this year, he said.
In January, the ECB has kept its key interest rate unchanged at a record low of 1% for an eighth straight month. It aims to keep inflation below, but close to, 2% over the medium term. In view of the progressing economic recovery, the central bank have started removing some of its emergency measures as its policymakers feel such measures are not needed at the same extend it required at the height of the crisis.
According to Commerzbank's Rainer Guntermann, high overcapacities in the corporate sector and rising unemployment will also dampen the pressure on prices in the foreseeable future. The analyst said inflation is unlikely to change ECB's current monetary policy plans in the foreseeable future.
In a separate release, the statistical agency revealed that the seasonally adjusted jobless rate rose to 10% in December from a downwardly revised 9.9% in November. The current rate is the highest since August 1998. Economists were looking for a rate of 10.1%. The number of unemployed stood at 15.76 million in December, up from 15.67 million in November.
"Unemployment may now be close to a peak, but the rises seen over the last year could still bear down strongly on wage growth over the coming months, helping to keep inflation subdued," said Jonathan Loynes, chief European economist at Capital Economics. "The ECB has good reason to be more dovish than both the Fed and the Bank of England," he added.
The jobless rate for the EU27 edged up to 9.6% from 9.5%. Among the member states, the lowest unemployment rates were recorded in the Netherlands followed by Austria, while Latvia and Spain observed the highest rates.
News are provided by InstaForex.
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Trichet Repeats Eurozone Recovery Would Be Uneven
Trichet Repeats Eurozone Recovery Would Be Uneven
The recovery process in the Eurozone economy is likely to be uneven, European Central Bank President Jean-Claude Trichet said Thursday, after the central bank retained key interest rate at a record low of 1%.
In his introductory statement, Trichet said this outlook remains subject to uncertainty. The outcome of the monetary analysis confirms the assessment of low inflationary pressure over the medium term, he added.
He noted that the the euro area has been benefiting from a turn in the inventory cycle and a recovery in exports, as well as from the significant macroeconomic stimulus under way and the measures adopted to restore the functioning of the financial system.
But, he asserted that these stimuli will unwind over time, while activity is likely to be adversely affected by the ongoing process of balance sheet adjustment in the financial and non-financial sectors, both inside and outside the euro area. Additionally, low capacity utilization rates are likely to dampen investment, and unemployment in the euro area is expected to increase somewhat further, thereby lowering consumption growth.
On prices, the central banker said inflation is expected to be around 1% in the near term and to remain moderate over the policy-relevant horizon. Trichet also said inflation expectations over the medium to longer term remain firmly anchored in line with the Governing Council's aim of keeping inflation rates below, but close to, 2% over the medium term.
He repeatedly urged banks to use the improved funding conditions to strengthen their capital bases further and, where necessary, take full advantage of government support measures for recapitalization.
Further, he pointed out that many euro area countries are faced with large, sharply rising fiscal imbalances. "It is of paramount importance that the stability programme of each euro area country clearly defines the fiscal exit and consolidation strategies for the period ahead," Trichet said. He urged countries to focus more on expenditure reforms.
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Malaysia Dec. Trade Surplus Widens
Friday, the Department of Statistics Malaysia announced that the trade surplus stood at MYR 12.1 billion in December, up from MYR 8.88 billion in November. This was the 146th consecutive month of trade surplus since November 1997. Economists expected a trade surplus of MYR 9.35 billion for December.
Exports increased 9.2% month-on-month to MYR 54.67 billion in December from MYR 50.07 billion in November. This was the highest monthly exports for 2009. At the same time, imports climbed 3.4% to MYR 42.58 billion.
On an annual basis, exports increased 18.7% in December, compared to the 3.3% fall in the previous month. Economists were looking for an increase of 12.5%. Meanwhile, imports grew 23.3% in December, faster than the 2.3% increase in November. Economists expected an increase of 21.5%.
In the fourth quarter, exports grew 10.6% sequentially to MYR 159 billion, while imports rose 8% to MYR126.55 billion. Year-on-year, exports and imports increased by 5.1% and 6.7%, respectively.
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Yen Slides To 4-day Low Against Most Majors
Tuesday, the Japanese yen extended its early Asian session's slide against its major opponents in late trading and slumped to multi-day lows against most of them.
The yen reached a 4-day low of 123.15 against the euro and 83.92 against the Swiss franc around 2:30 am ET and this may be compared to yesterday's closing values of 121.84 and 83.19, respectively. On the downside, the yen may find support around 84.9 against the franc and 123.6 against the euro.
Germany's consumer price index, or CPI, rose 0.8% year-on-year in January after an increase of 0.9% in December, the Federal Statistical Office said today. On a monthly basis, the CPI declined 0.6% versus 0.8% rise in the previous month. Thus, the statistical office confirmed preliminary inflation figures for January.
At the same time, a report from the Federal Statistical Office showed that the German foreign trade balance showed a surplus of EUR 136.1 billion in 2009, smaller than the EUR 178.3 billion in 2008. According to provisional results of the Deutsche Bundesbank, the current account surplus stood at EUR 119.4 billion in 2009, down from EUR 165.2 billion.
The yen also dropped to a 4-day low of 140.27 against the pound and 89.65 against the US dollar by this time, compared to 139.13 and 89.27, respectively hit late New York Monday. If the domestic unit declines further, it may test support around 90.0 against the buck and 141.6 against the pound.
Thirty-two percent of surveyors in the United Kingdom expect house prices to rise rather than fall, the January issue of the Royal Institution for Chartered Surveyors' survey revealed today. That was higher than the 27 percent that analysts had been expecting following the 30 percent total in December.
At the same time, retail sales in the united Kingdom were up just 1.2 percent on year in January, the British Retail Consortium said today, the weakest annual gain in 15 years. Retail sales had risen a revised 3.2 percent on year in December.
Against the Australian dollar, the Japanese yen fell to a 5-day low of 78.19 around 2:40 am ET. The aussie-yen pair, which finished Monday's trading at 77.2, is presently worth 78.02 with 79.6 seen as the next likely target level.
Moving well off from early Asian session's 4-day high, the Japanese currency drifted lower to 83.94 against the Canadian dollar and 61.89 versus the New Zealand dollar around 2:30 am ET. The yen that closed yesterday's deals at 61.0 against the kiwi and 83.01 versus the Canadian dollar is currently quoted at 61.7 and 83.7, respectively.
Across the Atlantic, the US Commerce Department is due to release its wholesale inventories report at 10:00 am ET. Economists expect wholesale inventories at the end of December to show a 0.5% increase.
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German Exports Rise For First Time Since 2008
German exports rose on an annual basis for the first time in fourteen months in December, data released by the Federal Statistical Office showed Tuesday. However, the year 2009 saw exports falling the most since 1950.
As global demand started picking up amid the economic recovery, German exports rose 3.4% year-on-year in December. That was the first rise since October 2008 and followed a 3.6% decline in November.
"Today's numbers highlight once again that the German economy can almost always rely on a helping hand from the export sector," said Carsten Brzeski, senior economist at ING Bank. "The road might be bumpy but it is the road to recovery and not a dead-end street."
On a monthly basis, exports continued to rise for a fourth month, with 3% rise in December. That was in contrast to a 0.1% drop economists had expected. In November, overseas sales grew 1.1%.
According to Commerzbank analyst Simon Junker, the trend in foreign trade is still clearly upwards and contributed positively to economic growth in the fourth quarter. In the coming months, the analyst expects exports to climb again, although the dynamics should slow down.
Suggesting that domestic demand is likely to recover in the near future, the pace of decline in imports slowed to 6.5% annually from 15.1% in November. Moreover, imports rose 4.5% month-on-month, the first rise in three months.
Colin Ellis, an economist at Daiwa Capital Markets Europe, said today's data could reflect some normalization in imports. The economist sees the German economic recovery to be disproportionately dependent on exports during 2010 amid subdued consumer spending.
The trade surplus in December was EUR 13.5 billion, down from EUR 17.2 billion excess in November. Provisional results of the Deutsche Bundesbank showed a current account surplus of EUR 20.6 billion for December, up from EUR 17.8 billion surplus in the previous month.
Further, Destatis reported that Germany exported commodities to the value of EUR 803.2 billion in 2009, down 18.4% over 2008. Similarly, imports dropped 17.2% to EUR 667.1 billion. The statistical office said it was the biggest decline recorded in foreign trade in relation to both imports and exports since 1950.
The foreign trade balance showed a surplus of EUR 136.1 billion in 2009, narrower than the EUR 178.3 billion in the previous year. The current account surplus during the period was EUR 119.4 billion, smaller than EUR 165.2 billion surplus logged in 2008.
"As regards the world's top exporting nations, Germany as the largest exporter was overtaken by China in 2009," Destatis said. Citing information from the Chinese Ministry of Commerce, Destatis said Chinese exports amounted to US$1,201.7 billion, while German exports totaled US$1,121.3 billion in 2009.
Also on Tuesday, the statistical office confirmed January's consumer price inflation at 0.8%, slightly down from 0.9% recorded in December.
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Euro Declines Against Most Majors
The euro lost ground against most of its major counterparts during European session on Thursday.
Against the British currency, the euro slipped to 0.8759 at 9:00 am ET, down from a new multi-week high of 0.8844 hit at 4:15 am ET. The current quote for the euro-pound pair is 0.8761, compared to yesterday's close of 0.8811.
The euro traded in a tight range against the Swiss franc. As of now, the euro-franc pair is trading near yesterday's close of 1.4666.
The euro lost ground against the U.S. dollar. At 9:00 am ET, the euro fell to 1.3653 against the U.S. currency. As of now, the euro is worth 1.3669 against the U.S. dollar. The euro-greenback pair closed yesterday's trading at 1.3734.
The euro showed a downtrend against the Japanese currency as well. At 9:10 am ET, the euro declined to 122.49 versus the yen. At present, the euro is trading at 122.72 versus the yen, compared to yesterday's close of 123.61.
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Dollar Hits Fresh Highs Versus Slumping Euro
Risk averse traders continued to flock to the relative safety of the dollar on Friday, with the world's de facto reserve currency enjoying a solid bid amid growing speculation the steam has run out of the global recovery.
The buck hit a fresh 9-month high again the euro, which has been hammered amid concerns that Greek debt problems will spread to other fragile economies without meaningful intervention on the part of more stable euro area nations.
However, with the eurozone struggling with anemic economic growth, major economies may be hesitant to drastically boost spending in order to prevent the Greek contagion.
European officials offered vague promises to support Greece on Thursday, and are expected to detail an aid package sometime next week.
Meanwhile, encouraging US retails sales data was overshadowed by news that China is engineering a soft slowdown of its economy.
A report from the Commerce Department on Friday showed that retail sales increased by 0.5 percent in January following a revised 0.1 percent decrease in December.
Adding to worries about the sustainability of the global recovery, China, now the engine of global growth, hiked its reserve requirement on banks in order to stem lending.
Even with the Dow taking back most of a 160 point drop in early dealing, the dollar sustained most of its gains against the euro.
The dollar rose to 1.3531 versus the euro, its highest level since last May, then backed off a penny to 1.3650.
At the same time, the buck extended this week's run of choppy trading versus the sterling, bouncing back and forth near 1.5600. The buck touched an 8-month high of 1.5533 a week ago, but has since risen no further.
The dollar also remained directionless against the yen, hanging around the Y90 mark.
The eurozone continued to lag behind the global economic recovery in the fourth quarter of 2009. Gross domestic product across the eurozone grew by only 0.1% in the fourth quarter compared to the previous three-month period.
The German economy, Europe's largest, unexpectedly stagnated in the fourth quarter as final consumption expenditure and investment failed to support growth.
Better-than-forecast French growth figures may have prevented the eurozone economy from sliding back into contraction mode.
Greece, saw its output shrink by 0.8% in the fourth quarter, casting doubts about the Greek public's willingness to accept cost cutting measures aimed at getting the nation's debt under control.
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Euro Mixed Against Majors
The euro traded mixed against other major currencies during early European deals on Monday. The euro pared its recent gains against the pound and the franc, but declined against the yen. However, the euro recovered its recent losses against the U.S. dollar.
European stocks rose today in early trade, with banks and commodity stocks taking the lead as investors awaited the euro zone finance ministers meeting.
In early deals, Germany's DAX climbed 0.5%, France's CAC-40 index jumped 0.8% and U.K.'s FTSE 100 index rose 0.7%.
The euro pared its recent gains against the pound during early European session on Monday. The euro slipped to 0.8673 at 4:00 am ET, moving down from 0.8705 hit earlier. Presently, The euro-pound pair is trading near Fridays' New York session close of 0.8674.
The euro lost some its late Asian session gains versus the Swiss currency during early European deals on Monday. Moving down from a high of 1.4681 touched at 12:55 am ET, the euro reached a low of 1.4655 at 4:30 am ET. As of now, the euro is trading at 1.4656 against the franc, compared to Friday's New York session close of 1.4666.
On Monday, against the yen, the euro extended its Asian session's downtrend during early European deals. At 4:30 am ET, the euro fell to 122.43 against the yen. The current quote for the euro-yen pair is 122.45, compared to Friday's close of 122.67.
The euro recovered its recent losses against the U.S. dollar during early European deals on Monday. The euro drifted higher to 1.3610 at 4:15 am ET, moving up from 1.3594 hit earlier. As of now, the euro is worth 1.3608 against the greenback, compared to Friday's close of 1.3623.
The U.S. financial markets are closed today in observance of Presidents Day.
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ECB's Quaden: No Plans To Raise Key Rate
The European Central Bank currently has no plans to raise interest rates as there is no imminent risks of inflation and it would withdraw emergency support measures gradually, Governing Council member Guy Quaden said Wednesday.
There is "no reason to raise interest rates at the moment," Quaden said in Brussels. "We don't see any risks for the moment."
The central bank has kept its interest rate at a record low of 1% since May 2009 to support the economy in battling a severe downturn. The bank also injected billions of euros to maintain liquidity in the region's banking system.
With regard to wiping out emergency measures, Quaden, who also heads the National Bank of Belgium, said a gradual approach would be the best. He noted that a delayed withdrawal may bring negative consequences. According to the central banker, the Eurozone recovery is fragile as it was led by huge fiscal stimuli and unemployment would keep rising as firms continue to suffer.
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Dollar On Pause Near 9-Month Highs
The dollar was little changed versus other major currencies Monday morning in New York, holding onto most of its strong recent gains versus the struggling euro.
The buck hit new 9-month highs last week amid speculation the Federal Reserve may be getting set to tighten monetary policy following a surprise move to raise the discount lending rate to banks.</p>
With Europe mired in debt problems and experience sluggish growth, the dollar has surged over the past few months.
The buck was at 1.3590 versus the euro this morning, having touched as high as 1.3440 last week.
Against the sterling, the dollar was steady at 1.5456, pulling back a penny from Friday's highest mark since last May.
At the same time, the dollar drifted slightly lower versus the yen, easing to 91.20 from a monthly high above 92.
With no major economic data on tap for the day, traders will focus on Fed Chairman Ben Bernanke's appearance before the House Financial Services Committee.
Later this week, the markets will be treated to preliminary fourth quarter growth figures, as well as data on housing and employment.
In economic news from overseas, Greece will meet its very ambitious deficit-reduction goals and the country's government is prepared to take additional measures, Greek central bank governor George Provopoulos said in an interview with Bloomberg.
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Euro Eases From Multi-day Highs Against Most Majors
In early European deals on Monday, the euro eased from an early Asian session's multi-day highs against the dollar, the yen and the pound as investors remain concerned about sovereign debt problems.
Research firm DBS said today that the euro's direction this week depends on two key events, namely the Greek bond issue and the Federal Reserve Chairman Ben Bernanke's testimony.
Early this week, Greece is expected to announce details on its plan to issue 10-year bonds, while Bernanke is expected to deliver his semi-annual congressional testimony on February 24 and 25.
The firm is of the view that the euro will resume its depreciation if the Greek bond issue causes widening of Greek credit default swap and if Bernanke relays more optimism about recovery, while also showing patience on rate hikes.
The euro that rose to an 11-day high of 0.8819 against the pound in early Asian deals on Monday showed choppy trading in late Asian deals but fell during the early European session. As of now, the euro-pound pair is worth 0.8795, down from Friday's close of 0.8805.
Against the franc, the euro declined to 1.4649 at 4:25 am ET, from an early Asian session high of 1.4668. As of now, the euro-franc pair is trading near Friday's close of 1.4649.
Monday morning in Asia, the euro strengthened to an 18-day high against the Japanese currency, but pared gains during late trading and extended its slide in early European deals. At 4:30 am ET, the euro-yen pair was worth 124.71, compared to Friday's close of 124.67.
Moving down from an Asian session's multi-day high of 1.3665 against the U.S. dollar, the euro touched a low of 1.3618 at 4:35 am ET. At present, the euro-dollar pair is trading at 1.3617, compared Friday's close of 1.3587.
Looking ahead, San Francisco Federal Reserve President Janet Yellen is scheduled to speak at the University of San Diego at 10:30 am ET.
Meanwhile, the Federal Reserve Chairman Ben Bernanke is scheduled to appear before the House Financial Services Committee hearing on "Prospects for Employment Growth: Is Additional Stimulus Needed?" at 11 am ET.
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Australia Better Prepared To Accommodate Mining Boom, Battellino Says
Reserve Bank of Australia deputy governor Ric Battellino said on Tuesday that the country was better prepared to deal with a mining boom than in the past because of its floating exchange rate and tighter monetary and fiscal policy frameworks.
But the rapid emergence of China and India means the current mining surge could be a lot longer than previous booms, he said.
In a speech to the Sydney Institute, Battellino said the current boom began in 2005 before being held back by the global financial crisis and that now, the dynamics of a boom are starting to reappear.
"History tells us that mining booms are periods of significant economic change and that they can pose complex challenges for policy makers," said Battellino.
"Key among these is the need to ensure flexibility in the economy and maintain disciplined macroeconomic policies in order to contain the inflationary forces generated by the boom."
Battellino did not elaborate on the outlook for monetary policy, with the RBA's March rate setting meeting fast approaching.
"In the 30 years since the previous boom, the Australian economy has developed in ways that should make it better able to accommodate the surge in mining activity that is currently under way," said Battellino.
The central banker said the floating exchange rate is a key difference from the past while goods and labor markets are more flexible, and monetary and fiscal policy frameworks are more "soundly based".
"This gives grounds for confidence that we can do better this time, but the task will not be without challenges," Battellino said.
Australia was the first major economy to raise interest rates in the aftermath of the global financial crisis.
The country's economy has been shielded from the worst of the worldwide recession, thanks to continuing strong demand from China for its abundant mineral resources and active stimulus measures implemented on the domestic front.
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Euro Mixed Against Majors Following Economic Reports
Euro Mixed Against Majors Following Economic Reports
During early European deals on Wednesday, the euro showed mixed trading against other major currencies amid various economic reports, which include German final GDP for the fourth quarter, GfK consumer confidence index for March, Italy's retail sales and the Euro-zone industrial new orders for December.
While the euro gained against the dollar and the pound, it recovers recent losses against the yen. On the other hand, the euro showed choppy trading against the franc.
German gross domestic product was flat in the three months through December period, the Federal Statistical Office said, confirming preliminary estimates. The stall in German growth follows two quarters of expansion in Europe's largest economy.
Meanwhile, market research group GfK said today that consumer confidence among Germans is likely to decline going into March, as worries over unemployment weigh on consumers. The forward-looking consumer sentiment indicator, based on a survey of about 2,000 Germans, fell to 3.2 in March from an upwardly revised 3.3 in February. This was better than consensus forecasts for a reading of 3.
At 5:25 am ET, the euro reached 0.8786 against the pound, up from yesterday's close of 0.8758. As of now, the euro-pound pair is worth 0.878.
The euro showed range-bound trading against the Swiss currency. The euro bounced between 1.4638 and 1.4650. The euro-franc pair is now trading near Tuesday's close of 1.4643.
The euro staged a recovery against the Japanese yen. Moving up from a low of 121.64 hit at 4:00 am ET, the euro soared to 122.16 at 5:10 am ET. The current quote for the euro-yen pair is 122.12, up from yesterday's close of 121.88.
Against the U.S. dollar, the euro that bounced between 1.351 and 1.355 moved off the range around 5:10 am ET. The euro-greenback pair, which closed yesterday's deals at 1.3511, is now worth 1.3564.
From the U.S., the new home sales report for the month of January is slated for release at 10:00 am ET.
Investors also remain cautious as the Federal Reserve Chairman Ben Bernanke is set to deliver his semiannual report on the economy today and tomorrow. He is expected to shed light on how soon key U.S. rates may start to rise, after the surprise increase last week in the rate the Fed charges banks for emergency loans.
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Japan Unemployment Rate 4.9% In January
Japan's unemployment rate came in at a seasonally adjusted 4.9 percent in January, the Ministry of Internal Affairs and Communications said on Tuesday, beating expectations for a steady performance after showing 5.1 percent in December.
The number of employed persons in January was 62.13 million, a decrease of 790 thousand or 1.3 percent from the previous year.
The number of unemployed persons in January was 3.23 million, an increase of 460 thousand or 16.6 percent from the previous year.
Commenting on the data at a regularly scheduled press conference, Japanese Finance Minister Naoto Kan said the numbers show that the labor market is "improving somewhat."
The job-to-applicant ratio was unchanged at 0.46, falling shy of expectations for a mark of 0.47.
Also, household spending was weaker than expected in January, adding just 1.7 percent on year versus expectations for a 2.5 percent gain after climbing an annual 2.1 percent in December.
The propensity to consume was up 1.7 points on year to 88.8 percent.
Also on Tuesday, the Bank of Japan said that the monetary base in Japan was up 2.2 percent on year in February to 95.69 trillion yen, after adding an annual 4.9 percent in January.
Banknotes in circulation were up 0.1 percent, while coins in circulation shed 0.7 percent.
The current account balance jumped an annual 15.3 percent to 1.48 trillion yen, including a 15.7 percent surge in reserve balances.
Seasonally adjusted, the monetary base was down 16.8 percent to 94.97 trillion yen.
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Dollar Mixed As Economic Picture Remains Murky
The dollar briefly touched a fresh 9-month high versus the euro and kept most of its dramatic recent gains against the sterling Tuesday morning in New York, with markets waiting for further clues about the condition of the US economy.
A string of lackluster economic data released over the past few weeks has fueled concerns that the robust growth seen in the fourth quarter of 2009 was a temporary result of massive government spending.
However, the economies in Europe remain even more distressed, making the dollar an attractive alternative to the euro and sterling.
An overnight surge brought the dollar to 1.3434 versus the euro, its highest level since last May. However, the buck quickly turned back to trade at 1.3550.
Tuesday, a flash report from the Eurostat showed that consumer price inflation in the euro area stood at 0.9% in February, down from 1% in January.
The dollar consolidated its gains against the sterling, holding near 1.4950. Yesterday, the dollar skyrocketed to 1.4790 amid concerns about the British economy.
U.K. construction activity contracted in February, a survey conducted by the Markit Economics showed Tuesday. The seasonally adjusted CIPS/Markit Construction Purchasing Managers' Index fell slightly to 48.5 in February from 48.6 in January.
David Noble, Chief ****utive Officer at the Chartered Institute of Purchasing & Supply said, "While the UK economy slowly pulls into recovery mode, the construction sector has now been confined in recession territory for two years and is still very fragile."
Elsewhere, Japanese Finance Minister Naoto Kan said the government will not demand the Bank of Japan to purchase bonds directly from the government.
The dollar saw little movement against the yen, staying near 89 for a fourth day.
Conversely, the dollar remained under heavy pressure against its Canadian counterpart, hitting 7-week low of C$1.0340.
The Bank of Canada will make its interest rate announcement this morning. Economists expect the target for the key overnight rate to remain unchanged at 0.25 per cent.
Individual automakers are scheduled to release their monthly U.S. sales results for February. The data will reveal the unit sales of domestically produced cars and light duty trucks, including sports utility vehicles and mini-vans, during the month.
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China Targeting 8% GDP Growth This Year: PM
China's Prime Minister Wen Jiabao said Friday his country was seeking an 8% annual growth in gross domestic product (GDP), an inflation rate of about 3% and a basically stable Yuan currency for 2010, the year in which China is set to overtake Japan to become the world's second-largest economy.
In his annual "state of the Union" address to the opening session of the National People's Congress (NPC), China's top legislature, he also said that Beijing would maintain an appropriately flexible monetary stance and an active fiscal policy.
Expressing satisfaction over the country escaping, relatively unscathed, from the global financial crisis, Wen warned the nearly 3,000 delegates against complacency, and vowed to reverse the widening income gap between the rich and the poor as the country continued its economic advance.
"We must not interpret the economic turnaround as a fundamental improvement in the economic situation," he said, adding: "There is insufficient internal impetus driving economic growth."
Asserting that China needed to concentrate on restructuring the economy, Wen said: "This is a crucial year for.accelerating the transformation of the pattern of economic development."
After property prices peaked in 21 months in January, he set a target of 7.5 trillion yuan (?750 billion USD 1128 billion) for lending.
However, the premier did not announce any roll-back in the massive 4.0 trillion yuan (?400 billion USD 602 billion) stimulus package that spurred a rebound and helped to ensure the economy grow by 8.7 per cent last year.
The premier unveiled increases of 8.8 per cent on social spending and 12.8 per cent on rural outlays, as he pledged to expand pensions, raise health-and-social-security outlays to avert instability in the economy.
Wen warned of the latent risk in China's banks, and promised to crack down on property-speculation. He also cited excess capacity in manufacturing and weak support for the rural income growth. He urged Chinese firms to improve their ability to innovate and produce high-tech and high-quality products.
In his wide-ranging speech to the rubber-stamp parliament, the premier dwelt on high areas of concern among his 1.3 billion fellow-citizens: soaring house prices, jobs, inflation and corruption. He said: "Everything we do, we do to ensure that the people live a happier life with more dignity."
After the recent ethnic riots in Tibet and the Muslim far western Xinjiang province, the premier lay emphasis on the need to ensure minorities felt a "sense of citizenship", saying: "The Chinese nation's life, strength and hope lie in promoting solidarity, (and) achieving common progress of our ethnic groups."
Wen's speech came a day after Beijing announced an increase of 7.5 per cent in its defense budget for 2010, a reduction of 50 per cent compared to last year's planned growth of 14.9 per cent--the slowest pace of expansion in more than a decade.
Li Zhaoxing, spokesman for the annual session of the National People's Congress (NPC), told a press conference Thursday in Beijing that the planned defense budget was 532.115 billion yuan (about USD 78 billion), an increase of about 37 billion yuan from last year's figure.
This marks the first time that China's defense budget growth rate rose less than 10 per cent after more than 20 years of double-digit increases.
Defense-spending would account for 6.4 per cent of the country's total fiscal expenditure in 2010, the same as last year, he said, adding, as a proportion of the GDP, China was still spending less than many other countries, including the United States.
China's defense expenditure in recent years accounted for about 1.4 per cent of its GDP, he said, noting that ratio was four per cent for the United States, and more than two per cent for the United Kingdom, France and Russia.
Taking into account China's large population, its vast territory, and its long coastline, the country's defense budget was "comparatively low," Li said. But he pointed out that the figures were tentative until the budget plan was approved at the NPC annual session due to open Friday in Beijing.
The spokesman said the increased budget would be mainly used to support military reforms and improve its capability to deal with various security threats and complete diversified tasks. A part of the money would be used to raise the living standards of servicemen, he added.
Li also claimed that China was increasing transparency on its expenditure on defense after Washington repeatedly urged Beijing to be more open about its rapidly-rising military-spending. As a part of this exercise, he said his country was submitting defense budgets to the NPC annual sessions for approval, issuing white papers every two years on its national defense, and establishing a spokesperson system and websites for its Defense Ministry.
Asserting that the only purpose of China's military strength was to safeguard the country's sovereignty and territorial integrity, the NPC spokesman added Beijing had always taken the path of peaceful development in line with its national defense policy.
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Greek PM Calls For U.S. To Help Regulate Speculators
Greece Prime Minister George Papandreou will meet with U.S. President Barack Obama in Washington on Tuesday, where he will appeal for assistance in regulating the currency traders and hedge funds that have bet against Greek debt.
Greece recently announced measures to resolve its debt issues, hoping to attract aid from its European neighbors.
While Papandreou did not come to Washington looking for a hand out, he stressed the U.S. must play a vital role in stopping "unprincipled speculators" from aggravating the Greek debt problems, doing damage to already frail global financial markets.
A number of European leaders are pointing to speculators as the main reason that Greek financing costs have skyrocketed. For its part, profligate Greece has run up a deficit that is 12.7% of GDP, far beyond the 3% limit set by euro area nations.
"Unprincipled speculators are making billions every day by betting on a Greek default," said Papandreou, after meeting with Secretary of State Hillary Clinton on Monday.
"That is why Europe and America must say 'enough is enough' to those speculators who only place value on immediate returns, with utter disregard for the consequences on the larger economic system - not to mention the human consequences of lost jobs, foreclosed homes, and decimated pensions," he added.
Papandreou stressed that speculation does not allow Greece to borrow at the same rates other European Union countries and the Eurozone countries borrow at, a situation that is unsustainable within a common currency.
"We're not asking for money," Papandreou insisted. "We're not asking for bailouts. We're simply saying what we want to be is equal partners, as we have taken these measures on the market to be able to get what others also can get, which is basically normal rates of borrowing."
Secretary Clinton commended the prime minister for "moving quickly to put in place changes that are called for given the economic consequences of the fiscal situation that he inherited."
"What I think Greece is looking for...is that the United States, working in the G-20, will make some of the changes in regulatory regimes governing some of these financial instruments that have been used to the detriment not only of Greece, but of other countries, including our own."
Prior to remarking on the Greek debt crisis, Clinton congratulated Iraq on holding parliamentary elections. In a lighter moment, she quipped that Greece, as the birthplace of democracy, should get a royalty any time there's a democratic election anywhere in the world.
"It would help my deficit, too," Papandreou joked.
Papandreou will meet today with President Obama and Treasury Secretary Timothy F. Geithner.
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First-Time Jobless Claims Show Modest Decrease, Continuing Claims Rise
While the Labor Department released a report Thursday morning showing a modest decrease in first-time claims for unemployment benefits in the week ended March 6th, the report also showed an increase in continuing claims.
The report showed that initial jobless claims edged down to 462,000 from the previous week's revised figure of 468,000. Economists had expected jobless claims to slip to 460,000 from the 469,000 originally reported for the previous week.
Peter Boockvar, equity strategist for Miller Tabak, said, "Due to the noise around the snow storms, it's best to look at the 4-week average, which smoothes out the data."
The less volatile four-week moving average rose to 475,500 from the previous week's revised average of 470,500. With the increase, the moving average reached its highest level since late November of 2009.
Additionally, the Labor Department said that continuing claims, a reading on the number of people receiving ongoing unemployment help, rose to 4.558 million in the week ended February 27th from the preceding week's revised level of 4.521 million.
With the increase, continuing claims bounced off the more than one-year low set in the previous week, which was the lowest level since claims came in at 4.487 million in the week ended January 3rd, 2009.
On the other hand, the report also showed that those receiving emergency unemployment compensation fell by almost 160 thousand in the week ended February 20th to 5.528 million. Those receiving extended benefits also fell by about 15 thousand in the week.
Boockvar said, "We hope this category begins to fall due to recipients finding new jobs rather than from exhaustion of benefits, but the hiring outlook still remains uncertain."
Last Friday, the Labor Department released a report showing that payroll employment showed a relatively modest decrease in the month of February, despite the impact of severe winter weather.
The report showed that non-farm payroll employment fell by 36,000 jobs in February following a revised decrease of 26,000 jobs in January. Economists had expected a more substantial loss of about 68,000 jobs compared to the loss of 20,000 jobs originally reported for the previous month.
While the Labor Department acknowledged that the data was impacted by the severe snowstorms in early February, it said it is not possible to precisely quantify the net impact of the storms.
The Labor Department also said that the unemployment rate in February remained unchanged from the previous month at 9.7 percent. The unemployment rate had been expected to tick up to 9.8 percent.
News are provided by InstaForex.
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China Inflation Picks Up To 2.7% In February
China's consumer price inflation rate accelerated more than expected in February, increasing the pressure on its central bank to raise interest rates amid fears the economy may be overheating.
Consumer prices increased 2.7% year-on-year in February, the National Bureau of Statistics said, exceeding expectations for a 2.5% increase following the 1.5% growth in the previous month.
The rise in prices was mainly driven by a 6.2% surge in food prices. Non-food prices climbed 1%.On a monthly basis, the consumer price index rose 1.2% in February.
In the first two months of the year, consumer prices increased 2.1% compared with the same period a year ago. Economists look for the combined inflation data for the first two months as it smoothes the distortion caused by the Chinese New Year holiday.
The pickup in the inflation rate adds to worries that China's economy may be expanding too quickly.
However, a spokesman for the statistical office said inflation will ease in March as weather conditions improve, bringing down food prices.
Figures released today by the People's Bank of China showed that bank lending was down sharply in February, as the government seeks to rein in runaway growth in the economy.
Chinese banks extended CNY 700.1 billion in new local-currency loans in February, down from the CNY 1.39 trillion lent in January.
M2 money supply - the broadest measure of money supply in the country - surged up 25.5% year-on-year in February, slower than the 26% increase in the previous month.
Separately, the statistical bureau said that producer prices surged 5.4% annually in February. The growth exceeded expectations for a 5.1% increase and follows the 4.3% growth in the previous month.
Industrial production in China increased 12.8% year-on-year in February. This came below forecasts for a 19.5% increase.
In the first two months of the year, industrial production increased 20.7% compared to the same period a year ago.
The statistical bureau also announced that retail sales were up 22.1% annually in February, also exceeding expectations for a 18.7% gain. In the first two months, retail sales were up 17.9%.
Meanwhile, urban investments in fixed assets in the first two months of 2010 increased 26.6%, above expectations for 25.6% growth.
A separate real estate report from the statistical office showed that property prices in 70 major cities across the country were up 10.7% year-on-year in February, faster than the 9.5% increase in the previous month.
Housing prices were up 13% year-on-year in February, faster than the 11.3% increase in January, the statistical office said.
Property sales in the first two months of the year soared 70.2% compared to the same period a year ago.
News are provided by InstaForex.
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Euro Gains On Dollar Despite Specter Of Deflation
Euro Gains On Dollar Despite Specter Of Deflation
The euro was mixed on Tuesday, firming up against the dollar despite concerns about deflation in the Euro zone.
Eurozone core inflation dropped to an all-time low in February, suggesting that deflationary pressures persist in the 16-nation economy.
Core inflation, which excludes energy, food, alcohol and tobacco, stood at 0.8% in February, down from 0.9% in January, data released by the Eurostat showed Tuesday. That was in line with the consensus forecast and was the lowest rate since comparable data was compiled in 1990.
However, this morning's economic news will likely be overshadowed by the Federal Reserve's latest statement on interest rates, which is expected at around 2:15 pm ET.
While the Fed is expected to keep interest rates near zero, the accompanying statement will garner significant attention for subtle changes the central bank's assessment of the US economy and timeline for future rate hikes.
Yesterday, European finance ministers worked out a strategy for emergency loans to Greece, in case the country's $6.6 billion tax hikes and wage cut plans fail. Standard & Poor's affirmed the nation's credit ratings.
The euro rose to 1.3740 versus the dollar, staying away from a 9-month low of 1.3434 set earlier this month.
The euro slipped to .9054 versus the sterling, but remained within hailing distance of its 2010 highs above .9150.
In news from the US, new residential construction showed a notable decrease in the month of February, according to a report released by the Commerce Department on Tuesday. Analysts say the data was impacted by unusually bad winter weather in the Northeast.
The report showed that housing starts fell 5.9 percent to an annual rate of 575,000 in February from the revised January estimate of 611,000.
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Latvia Will Adopt Euro In 2014
The Latvian government has said the baltic country will officially adopt the euro on January 1, 2014.
The Latvian Cabinet of Ministers said the country must meet several criteria of the Maastricht Treaty before adopting the common currency.
The country's budget deficit must below 3% of the gross domestic product and total government debt must not exceed 60% of GDP.
After the common currency is adopted, both the lat and the euro will be in circulation within Latvia in order to ensure a smooth transition.
In order to quicken the process, change will only be given in euros during the transition period, the government said.
News are provided by InstaForex.
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Philadelphia-Area Manufacturing Shows Continued Signs Of Growth
Manufacturing activity in the mid-Atlantic region is continuing to show signs of growth in the month of March, according to a report released by the Federal Reserve Bank of Philadelphia on Thursday, with the index of activity in the manufacturing sector rising by more than expected.
The Philly Fed said its index of regional manufacturing activity rose to 18.9 in March from 17.6 in February, with a positive reading indicating growth in the sector. Economists had been expecting a more modest increase by the index to a reading of 18.0.
While the headline index showed a continued improvement in activity in the sector, the new orders index fell to 9.3 in March from 22.7 in February and the shipments index slipped to 13.6 from 19.7 in the previous month.
At the same time, the report showed an acceleration in the pace of employment growth in the sector, as the number of employees index rose to 8.4 in March from 7.4 in February. With the increase, the index rose to its highest level since October of 2007.
The Philly Fed said firms' responses continued to suggest that labor market conditions have been stabilizing in recent months.
On the other hand, the inventories index fell to a negative 11.0 in March from a positive 3.2 in February, indicating another contraction in inventories.
The report also showed that the prices paid index rose to 38.6 in March from 32.4 in February, while the prices received index fell to a negative 0.4 from a positive 3.7 in the previous month.
Looking ahead, the future general activity index remained positive for the 15th consecutive month, rising to 52.0 in March from 35.8 in February.
The Philly Fed added that the percentage of firms expecting employment to increase over the next six months exceeded the percentage expecting declines for the eleventh consecutive month.
Earlier this week, the New York Fed released its report on regional manufacturing activity, showing that conditions for New York manufacturers continued to improve at a steady pace in March.
The New York Fed said its index of regional manufacturing activity edged down to 22.9 in March from 24.9 in February, but a positive reading still indicates growth in the sector. Economists had expected the index to slip to a reading of 22.0.
News are provided by InstaForex.