Deflation And The Appreciation Of The Yen

Fundamental Analysis EUR "Equity markets are driven by two things: fundamentals and sentiment." - Lorne Baring, managing director at B Capital SA European stocks climbed on Friday after a report showed U.S. consumer confidence increased to the highest level in four years in May. USD "Confidence has been boosted by lower gasoline prices." - Paul Dales, a senior economist at Capital Economics Ltd. U.S. consumer confidence rose by more than expected in May as consumers became more optimistic on the outlook of the country's economy. GBP "The April producer price data … do little overall to reduce the uncertainty as to whether or not the Bank of England will eventually do more Quantitative Easing." - Howard Archer, an economist at HIS Global Insight U.K. producer prices rose by more than ...

Yen at 2-month highs in the wake of disappointing BOJ and sluggish US GDP Economic Data (AU) AUSTRALIA MAR PRIVATE SECTOR CREDIT M/M: 0.4% V 0.3%E; Y/Y: 3.4% V 3.2%E (AU) AUSTRALIA MAR HIA NEW HOME SALES M/M: -9.4% V +3.0% PRIOR (multi-year low) (AU) AUSTRALIA APR TD SECURITIES INFLATION M/M: 0.3% V 0.5% PRIOR; Y/Y: 1.9% V 1.8% PRIOR (NZ) NEW ZEALAND MAR BUILDING PERMITS M/M: 19.8% V 6.0%E (NZ) NEW ZEALAND APR NBNZ ACTIVITY OUTLOOK: 36.1 V 38.8 PRIOR; BUSINESS CONFIDENCE: 35.8 V 33.8 PRIOR (8-month high) (NZ) NEW ZEALAND MAR TRADE BALANCE (NZ$) 134M V 417ME (KR) SOUTH KOREA MAR INDUSTRIAL PRODUCTION M/M: -3.1% V +0.2%E; Y/Y: 0.2% V 2.2%E (KR) SOUTH KOREA MAY BUSINESS SURVEY MANUFACTURING: 90 V 85 PRIOR; NON MANUFACTURING: 85 V 82 PRIOR (SI) SINGAPORE Q1 UNEMPLOYMENT RATE PRELIM: 2.1% V 2. ...

The Asian region is about to start a calm week, as the eyes will be focused on Japan except for Japan that dominates the week's data. The data starts with February's industrial production along with the CPI and the unemployment figures. Japan’s February preliminary industrial production index is due for release where the prior reading indicated an increase by 1.9%; also February's unemployment data will be released, which is expected to hold at 4.6%. The Japanese economy is currently struggling to recover and to beat its chronic problems, and on top of these problems comes the yen's ongoing appreciation. The currency recently retreated to its lowest level in 11 months to give some room for Japanese companies; however it's not enough especially after the recent contraction in the fourth- ...

The BoJ February meeting minutes showed that the Bank of Japan without prior warning added another 10 trillion yen ($128 billion) to its asset-purchase program along with setting an inflation goal after an economic slide fueled criticism it has been slower to act than counterparts. The asset-purchase program was raised by 10 trillion yen to reach 30 trillion yen along with a credit lending program, which reached 35 trillion yen; also the BOJ said that it will target 1% inflation for the first time. Additionally, this week the BoJ decided to keep the interest rate unchanged between zero and 0.1%, the asset purchase fund unchanged at 30 trillion yen and the credit-loan program at 35 trillion yen, although board member Ryuzo Miyao proposed an expansion of the asset-buying and loan-scheme by ...

The Swiss franc advanced against majors after the SNB decided to hold interest rate unchanged at zero and maintained the ceiling of franc at 1.20 per euro as the economy shows progress and deflation threats recede. The SNB said it expects a “moderate” pace near to 1% in 2012, while it forecasts CPI to record -0.6% this year, before prices rebound to 0.3% next year, and then rise further to 0.6% in 2014. The Swiss economy has been showing signs of strengthening, according to the most recent data despite the franc's appreciation. However, the SNB said if the franc did not weaken further risks could emerge, where the banks' assessment for the franc reveals that the Alpine currency is still high. The EUR/CHF pair is currently trading around 1.2100 after felling to a low of 1.2083 and a high ...

The Japanese annual consumer prices unexpectedly advanced during January compared with the previous two consecutive declines. The Index is recovering from the effects of deflation, according to the Japanese central bank's plan to raise consumer prices for 1% in 2012. The Japanese economy released January's annualized national CPI, where it advanced 0.1%, compared with the prior reading of -0.2%, also it exceeded expectations of -0.1%. On the other hand, the national CPI excluding fresh food for the same period advanced to 0.1%, compared with the prior reading of -0.1%, also it missed expectations of -0.2%. Finally, the national CPI excluding food and energy for the same period advanced to -0.9%, compared with the prior reading of -1.1. On the other hand, January's jobless rate was ...

The scale of money printing in the West has become so massive that the world may fall prey to "monetary anarchy," with traces of bubbles appearing everywhere. At least that's what some critics see in the latest round of cash pumping by major central banks. It is also an eerily reminiscent of 2011, when similarly generous monetary easing sparked higher oil prices, slowed the recovery and stoked speculative hot money flows into vulnerable emerging markets. The European Central Bank alone is expected to lend another half trillion euros or more of super-cheap money to banks on Wednesday, following Japan and Britain which have already injected fresh cash. The Federal Reserve has promised to keep interest rates low until 2014 and act further if needed. There is a sense of deja-vu in ...

The Japanese currency weakened to a seven-month low against the U.S. dollar as the highest yield premium on Treasuries when compared with Japanese debt since August damped the appeal of yen-denominated assets. The Japanese yen fell for the fifth consecutive day, which is considered the lowest level since last April, after a report showed sales of previously owned U.S. homes rose to the highest in almost two years, bolstering expectations for growth in North America. It has weakened 3.7 percent since the Bank of Japan on Feb. 14 unexpectedly expanded its asset-purchase program. This move is pretty significant for the nation's growth, as the chronic yen's appreciation also hurt the Japanese manufacturers along with Thailand's floods that disrupted production, while energy imports because ...

The Japanese consumer prices index fell for the third consecutive month, where the nation’s exports weakened as a result for the ongoing yen’s appreciation that contributed in interrupting the nation’s economic rebound from March’s earthquake. As, the Japanese national annualized CPI for December rose to -0.2%, compared with the prior reading of 0.5%, yet it came in line with expectations of -0.2. Also, the Japanese annual CPI excluding food and energy for December remained unchanged at -1.1%, as it came in line with both of the prior and expectation reading of -1.1%. On the other hand, the Japanese annualized CPI excluding fresh food for December rose to -0.1%, compared with the prior reading of -0.2%, yet it came in line with expectations of -0.1. Additionally, sales of winter ...