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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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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.
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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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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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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Industrial new orders in the 16-nation currency bloc rose unexpectedly in December, but the pace of growth slowed.
Industrial new orders growth eased to 0.8% in December from 2.7% in November, the European Union statistics agency Eurostat said Wednesday. The monthly growth slowed in December, while the consensus forecast was for a fall of 1%. Excluding orders for ships, railway and aerospace equipment, the index slipped 0.4%.
New orders for capital goods rose sharply by 7% month-on-month and increase in non-durable consumer goods was 0.3%. A 1.5% decrease in durable consumer goods and a 4.1% fall in intermediate goods dragged down the growth.
Annually, orders were up 9.5% in December, reversing November's revised 0.6% fall, which was revised from 0.5%. For the whole year, the new orders index plunged 22.6%.
New orders in EU27 grew 0.6% in December from the prior month, pushing the annual growth to 6.3%. Excluding volatile orders, the index dropped 0.8%. The average new orders index plummeted 21.9% in 2009.
The available information revealed that total manufacturing working on orders improved in ten member states and fell in eleven. The largest increases were registered in France, Lithuania and Latvia. On the other hand, Hungary, Ireland and the Netherlands reported steep declines.
Driven by both domestic and external demand, factory orders in the largest Eurozone economy declined in December. According to data issued by the Federal Ministry of Economics and Technology, German factory orders fell 2.3% on a monthly basis in December after an increase of 2.7% in November.
In the fourth quarter of 2009, the EU16 expanded only 0.1% sequentially with the German GDP remaining flat. Italy's economy contracted 0.2%, while the French economy logged 0.6% growth in the final quarter. Over the whole year 2009, Eurozone shrank 4%.
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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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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 Executive 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'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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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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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.
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