Industrial Production Falls More Than Expected In April

             

Industrial production fell by much more than expected in the month of April, according to a report released by the Federal Reserve on Thursday, with a notable decrease in factory output contributing to the bigger than expected decline.

The report showed that industrial production fell 0.7 percent in April following a revised 0.2 percent increase in March. Economists had been expecting a more modest 0.3 percent decline compared to the 0.3 percent increase originally reported for the previous month.

A notable decrease in manufacturing output contributed to the bigger than expected decline, with production in the manufacturing industry falling by 0.8 percent in April after coming in unchanged in the previous month.

The Federal Reserve said that factory output in April was held down by a large drop in the index for motor vehicles and parts, with strikes and strike-related parts shortages resulting in suspended production at many facilities.

The report also showed a 0.8 percent decrease in mining output in April, which followed a 1.0 percent increase in March. At the same time, utilities output edged up 0.3 percent after rising 0.7 percent in the previous month.

Additionally, the Federal Reserve said that capacity utilization fell to 79.7 percent in April from a revised 80.4 percent in March. The decrease exceeded the expectations of economists, who had expected capacity utilization to edge down to 80.2 percent.

The bigger than expected decrease in capacity utilization came as capacity utilization in the manufacturing sector fell to 77.5 percent from 78.3 percent and capacity utilization in the mining sector edged down to 90.6 percent from 91.4 percent.

Technorati Tags: Economy, USA, fvarga

US Data and Forex Rates

The dollar fell against the euro and the yen after a Federal Reserve report showed manufacturing in New York unexpectedly contracted this month.

The euro rose earlier against the dollar as Europe’s economy grew more than forecast in the first quarter, increasing the likelihood that the European Central Bank will hold interest rates steady this year.

At posting time 21:30 (GMT+8 ), Forex rates are:

 

EURUSD	1.5503
USDJPY	104.815
GBPUSD	1.9444
USDCAD	0.9994
USDCHF	1.0526
EURCHF	1.632
EURGBP	0.7974
EURJPY	162.4475
USDTWD	30.9541
AUDUSD	0.9378
NZDUSD	0.7577
USDSGD	1.3807
EURTWD	47.9742

 

Technorati Tags: Forex, Currencies, Rates, fvarga

Euro Zone Annual GDP Growth Stable At 2.2%

Euro zone economy expanded 2.2% year-on-year in the first quarter, same as in the fourth quarter of 2007, flash estimate from the Eurostat showed Thursday.

Economists expected the growth to slow to 1.9% in the first quarter.

Compared to the fourth quarter, the gross domestic product rose 0.7%, faster than the 0.4% recorded in the last quarter of 2007.

The economy grew more than the 0.5% expected by analysts.

 

Technorati Tags: Europe, GDP, fvarga

Yuan Gains Versus Currency Basket Signal Policy Shift

The yuan’s gains against currencies of its major trading partners in 2008 has exceeded all of last year’s advance, prompting Merrill Lynch & Co. to say China has made a “significant change” to policy.

The Westpac Nominal Effective Exchange Rate, a trade- weighted index for the yuan that includes the euro and the yen, has risen 3.5 percent, more than last year’s 3.4 percent.

The gauge has strengthened 2 percent this quarter while the yuan’s advance versus the dollar in the spot market slowed.

“The yuan is more focused on a basket of currencies instead of just the U.S. dollar,” said Ting Lu, an economist with Merrill Lynch in Hong Kong.

Gains in the yuan may slow against the dollar and accelerate versus the euro as policy makers combat inflation near an 11-year high and calm criticism from officials in Europe, China’s biggest trading partner.

China’s yuan has climbed 2.6 percent versus the euro and 5.4 percent against the yen since the start of April compared with a 0.2 percent rise against the U.S. currency.

Since a dollar peg was scrapped in 2005, China has managed the exchange rate against a basket of currencies including the euro, yen, South Korean won, Hong Kong dollar and British pound.

While the yuan has risen 18.2 percent against the dollar under the new system, it has fallen 8 percent versus the euro.

A change in China’s policy comes after Singapore, which manages the exchange rate within an undisclosed trading band versus a basket of currencies, last month unexpectedly announced an “upward shift” in the range to curb inflation.

 

Technorati Tags: Economy, China, Yuan, fvarga

German Economic Growth Accelerates

Economic growth in Germany, Europe’s largest economy, accelerated to the fastest pace in 12 years in the first quarter as companies stepped up spending on machinery and construction.

Gross domestic product rose 1.5 percent from the fourth quarter, when it increased 0.3 percent, the Federal Statistics Office in Wiesbaden said today.

Germany’s resilience is giving the European Central Bank room to leave interest rates at a six-year high to fight inflation.

The euro rose half a cent after the report to $1.5535 at 9:35am in Frankfurt.

The statistics office said investment was the main driver of first-quarter growth and consumer spending also contributed. While exports aided annual growth, they didn’t contribute to expansion in the quarter.

In the year, the economy grew 2.6 percent when adjusted for the number of working days, the office said.

The European Union’s statistics office in Luxembourg will publish first-quarter growth figures for the euro area later today.

Economists expected 0.5 percent expansion before today’s national figures were released, according to the median estimate in a Bloomberg survey.

French first-quarter GDP growth, at 0.6 percent, also exceeded forecasts, while the Austrian economy expanded 0.8 percent. In Spain, growth slowed to 0.3 percent from 0.8 percent and in the Netherlands to 0.2 percent from 1.2 percent.

German growth will slow to 1.4 percent in 2009, less than the economy’s long-term average growth rate of 1.5 percent, the country’s government-sponsored research institutes said April 17.

The ECB may start cutting borrowing costs in September to shore up the euro-region economy, a Bloomberg survey of economists shows.

ECB will cut its benchmark rate if the growth rate is in danger and if inflation is in control.

For now, it’s a lot of “if”, and EURO is covering its loss for now, quoting at posting time (16:40 - GMT+8 ) 1.5513 against the USD, with a high at 1.5546.

 

Technorati Tags: Economy, Europe, Euro, fvarga

US Dollar Slumps Versus Euro, British Pound On Weak US CPI

The US Dollar fell back versus the euro and British pound as US data indicated easing inflation pressures, but rose against the commodity dollars.

Indeed, the Australian and New Zealand dollar took the biggest plunge against the greenback, and was followed by the low yielding Swiss franc and Yen as rising stock prices spurred increased demands for carry trades.

Against the European currencies, the US dollar slipped as the British Pound ended the day above 1.9450, while the Euro rose toward 1.5500.

On the economic front, Consumer Price inflation inched lower as the index fell to 3.9 percent from 4.0 percent for the year, with the core measure of inflation following as it dipped to 2.3 percent from 2.4 percent.

 

Technorati Tags: Inflation, Economy, USA, USD, fvarga

Yen Trades Near One-Week Low Against Dollar on Stock Gains - Carry Trade Back

The yen traded near a one-week low against the dollar as gains in U.S. stocks led investors to buy higher-yielding assets funded in the Japanese currency.

The yen was close to one-week lows against the Brazilian real and the pound as a measure of currency volatility approached the lowest level since February, making investors more comfortable with risk. The New Zealand dollar fell to the lowest in more than three months after retail sales declined.

“The yen is likely to pull back further,” said Akio Shimizu, chief manager of foreign exchange trading in Tokyo at Mitsubishi UFJ Trust & Banking Corp., a unit of Japan’s second- largest lender. “Stocks have been relatively firm, and that highlights an increased appetite for risk.”

The yen traded at 105.16 against the dollar at 8:36am in Tokyo from 105.04 yesterday, when it fell to 105.44, the lowest since May 7. The U.S. currency was little changed at $1.5459 per euro. The dollar touched the all-time low of $1.6019 on April 22. Japan’s currency traded at 162.55 per euro from 162.52 yesterday.

The New Zealand dollar fell to as low as 75.56 U.S. cents, the weakest since Jan. 24, after retail sales in February contracted more than three times economists’ estimates.

The Canadian dollar was little changed at C$1.0037 after yesterday touching 99.64 cents per U.S. dollar, the highest level since March 19.

The Standard & Poor’s/TSX Composite Index of Canadian stocks rose to a record, boosting demand for the currency.

 

Technorati Tags: Forex, Currencies, Carry Trade, JPY, fvarga