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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.
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.
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.
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.
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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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.
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.
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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