“Back in the crisis days, the euro plunged against the Swiss Franc, as everyone rushed their money into Switzerland, to escape the crumbling Eurozone.

Then the Swiss National Banc — fretting about the strength of its own currency and the potential negative economic ramifications — put a ceiling on Franc strength, and so the Euro didn’t move against the Franc for a long time.

But now that fears are subsiding in Europe, we’re seeing the opposite of the run on Europe, and a run back into Eurozone, as folks repatriate their cash back out of Switzerland.

The Euro had a huge week against the Franc, and it’s continuing today, as this chart from Bloomberg shows….”

Read more

Full article

“The euro fell from near an 11-month high against the dollar after reports showed Italian industrial orders dropped and Spanish bad loans increased, adding to sign the region’s economy will struggle to expand this year.

Europe’s shared currency slipped from the highest in 20 month against the yen amid speculation its 4.7 percent gain this year has been too rapid. The Swiss franc declined to the least since May 2011 against the euro after a trade union called on the nation’s central bank to change its cap on the currency. South Africa’s rand dropped on concern labor protests will curb exports. The pound slid for a sixth day against the dollar as retail sales unexpectedly fell.

“The euro is giving back some of its gains,” said Lutz Karpowitz, a senior foreign-exchange strategist at Commerzbank AG in Frankfurt. “It went too high, too quickly. The economy is still very weak. We don’t expect the euro strength to remain.”

The euro declined 0.2 percent to $1.3356 at 7:39 a.m. New York time after appreciating to $1.3404 on Jan. 14, the strongest since Feb. 29. Europe’s shared currency rose 0.1 percent to 120.35 yen, after reaching 120.71, the most since May 2011. Japan’s currency lost 0.2 percent to 90.03 per dollar.

Europe’s shared currency will fall to $1.29 by the end of March, Commerzbank predicts.

Italian industrial orders fell 0.5 percent in November from a month earlier, a report showed today. The euro-area economy will contract 0.1 percent this year, according to analyst predictions compiled by Bloomberg. The U.S. will expand 2 percent, according to a separate survey.

Price Swings…”

Full article

“Australia’s bonds fell, pushing the benchmark 10-year yield up by the most in two weeks, after data showed economic growth in China exceeded economist estimates, supporting export prospects.

The rate on the three-year note also posted its biggest one-day advance in two weeks amid gains in Chinese industrial production and retail sales, boosting bets the Reserve Bank of Australia will keep borrowing costs unchanged when officials meet next month. New Zealand’s currency, known as the kiwi, weakened following a report that showed an unexpected drop in the nation’s consumer prices.

“All signs point to a modest pickup in Chinese growth towards the end of the year,” said Michael Turner, a fixed- income strategist in Sydney at Royal Bank of Canada. “It probably suggests the RBA will be comfortably on hold to February, if not March, which should keep the upward bias to yields in the near-term.”

Australia’s 10-year yield rose 12 basis points, or 0.12 percentage point, to 3.41 percent at 5:01 p.m. in Sydney, the biggest advance since Jan. 2. The rate on three-year securities climbed 10 basis points to 2.81 percent, also the largest increase since Jan. 2.

The Australian dollar fell 0.2 percent to $1.0522 and was little changed at 94.76 yen. Its New Zealand counterpart dropped 0.1 percent to 83.57 U.S. cents and rose 0.1 percent to 75.26 yen.

Chinese Growth

Gross domestic product in China, Australia’s biggest trading partner and New Zealand’s second-largest export destination, rose 7.9 percent in the fourth quarter from a year earlier, according to a report today by the National Bureau of Statistics. That compared with the 7.8 percent median estimate in a Bloomberg News survey and a 7.4 percent gain in the previous period.

Industrial output in December rose a more-than-expected 10.3 percent from the prior year, while retail sales climbed 15.2 percent….”

Full article

“Koichi Hamada, the former Yale professor advising Japanese Prime Minister Shinzo Abe on choosing a new central bank chief, signalled that a yen at 110 per dollar would pose a problem for the economy.

“I think 100 yen is a good level for Japan, 110 is too weak but 95 or 100 is no problem,” Hamada said after a speech in Tokyo today, referring to the level of the yen against the dollar. “We need to bring the yen back to a level that works well for Japan’s economy.”

The yen has weakened about 4.5 percent since Abe took office last month, with his administration pushing for more monetary easing and a doubled inflation target at the central bank. The government and Bank of Japan (8301) will issue a joint policy statement at next week’s central bank meeting, Finance Minister Taro Aso said earlier today.

Hamada, who once taught the current BOJ governor, Masaaki Shirakawa, said that the central bank has no choice but to conduct further monetary easing. He also said that the bank was to blame for the failure of Elpida Memory Inc. by not expanding its balance sheet sufficiently, which led to a strong yen. Japanese exporters have been hampered in recent years by strength in the yen, which reached a postwar high in 2011.

The currency was trading at 90.05 yen at 2:54 p.m in Tokyo, after touching a 2 1/2 year low of 90.21 earlier in the day. A range of 95-100 yen per dollar was last sustained in 2009….”

Full article

“The yen reached a 2 1/2-year low against the dollar and headed for its 10th weekly loss after a government adviser said the currency can keep weakening without hurting the economy, while the pound slid for a sixth day after U.K. retail sales declined. Metals rose after China’s growth accelerated and European stocks swung between gains and losses.

Japan’s currency declined 0.1 percent to 90 per dollar at 7:39 a.m. in New York after touching 90.21, the weakest level since June 23, 2010. The pound fell 0.3percent versus the dollar. Lead jumped 1.6 percent, zinc climbed 1.5 percent and a gauge of Chinese stocks jumped to a 17-month high. The Stoxx Europe 600 Index (SXXP) and Standard & Poor’s 500 Index futures slipped less than 0.1 percent. Japan’s Topix Index jumped 2.4 percent, capping a 10th straight weekly advance, on prospects the central bank will extend asset purchases…”

Full article 

“Australia’s dollar slid versus all of its 16 major counterparts after a report today showed employers in the country unexpectedly cut payrolls last month, adding to concern the domestic economy is slowing.

The so-called Aussie weakened versus the greenback and dropped for a third day against the yen after the jobless rate rose. New Zealand’s dollar, known as the kiwi, fell as Asian stocks reversed earlier gains, damping demand for higher- yielding assets.

Today’s data “underscores much of the economic weakness from last year,” said Jonathan Cavenagh, a currency strategist at Westpac Banking Corp. (WBC) in Singapore. “I wouldn’t be surprised to see a bit more of a correction in the Aussie toward the $1.05 level, but I still think dips will be well-supported.”

Australia’s dollar lost 0.6 percent to $1.0513 at 5:17 p.m. in Sydney. It dropped 0.3 percent to 93.19 yen, extending its 1.2 percent decline in the previous two days. New Zealand’s currency slid 0.2 percent to 83.96 U.S. cents after rising 0.2 percent yesterday. It was little changed at 74.41 yen.

Ten-year yields in Australia dropped to as low as 3.28 percent, the least since Dec. 31. New Zealand’s two-year swap rate, a fixed payment made to receive floating rates which is sensitive to rate expectations, was little changed at 2.78 percent. The MSCI Asia Pacific Index of shares lost 0.1 percent gaining as much as 0.6 percent earlier today.

Australia’s statistics bureau said the number of people employed in the country fell in December by 5,500 after a revised 17,100 gain in the previous month. The jobless rate rose to 5.4 percent from 5.3 percent in November….”

Full article

“Thailand joined a growing chorus of developing nations expressing alarm at the rapid appreciation of their currencies as increased monetary easing in the U.S. and Japan spurs demand for higher-yielding assets.

The baht climbed to a 17-month high today, before retreating after Finance Minister Kittiratt Na-Ranong said the exchange rate is “not at a good level” and exporters will face difficulties should it strengthen further. The Bloomberg- JPMorgan Asia Dollar Index is headed for a record eighth monthly gain and currencies in Colombia, Poland and Romania reached their strongest levels this month since at least February 2012….”

Full article

“The euro’s 8 percent gain against the U.S. dollar in the past six months is posing a fresh threat to the European economy just as it shows signs of escaping the debt crisis, said Jean-Claude Juncker, who leads the group of euro-area finance ministers.

Echoing policy makers from Switzerland to Japan in bemoaning strong exchange rates, Juncker late yesterday called the euro’s value “dangerously high” after the 17-nation currency this week traded above $1.34 against the dollar for the first time since February last year.

The euro has rallied amid growing signs in financial markets that the three-year debt turmoil is fading and after European Central Bank President Mario Draghi last week signaled no immediate plan to ease monetary policy further.

“It was said last year that the euro zone was at risk of breaking and I said last year that this won’t happen,” Juncker, who steps down this month as head of the so-called eurogroup, told an annual gathering of business leaders in Luxembourg. “The euro zone has become more stable after lots of efforts, some from me,” Juncker said, adding that now “the euro foreign-exchange rate is dangerously high.”

The European currency dropped as much as 0.9 percent after Juncker’s comments and reached an intraday low of $1.3262. It reversed declines after ECB Governing Council member Ewald Nowotny said the euro-dollar rate is not a concern and traded at $1.3322 at 11:13 a.m. London time, up 0.1 percent on the day….”

Full article

“The Australian dollar fell for a second day against the yen after data showed consumer confidence was little changed from a two-month low, underscoring concern the South Pacific nation’s economy is weakening.

The so-called Aussie slid versus most of its 16 major counterparts after the World Bank cut its global growth forecast for this year, tempering demand for higher-yielding assets. Australia’s bonds advanced for a third day. The New Zealand dollar, known as the kiwi, dropped versus its Japanese peer as Asian stocks declined.

“We’ve seen over the last week that domestic data hasn’t been that good and the Aussie’s taken perhaps a slight hit,” said Derek Mumford, a Sydney-based director at Rochford Capital, a currency risk-management company. “I wouldn’t say today’s data reflects any kind of booming confidence.”

Australia’s dollar fell 1 percent to 92.86 yen as of 4:50 p.m. in Sydney. It lost 0.2 percent to $1.0549. New Zealand’s currency bought 73.87 yen, 0.9 percent below the close in New York. It traded at 83.93 U.S. cents from 83.97 yesterday.

Ten-year yields in Australia dropped to as low as 3.36 percent, the lowest since Jan. 3. The MSCI Asia Pacific Index of shares lost 0.8 percent.

Australia’s sentiment index for January rose 0.6 percent to 100.6, a Westpac Banking Corp. and Melbourne Institute survey taken Jan. 7-13 of 1,200 adults showed today in Sydney. This month’s figure was little changed from the 100.03 level in December that was the least since October. Readings above 100 indicate optimists outnumbered pessimists….”

Full article

“Asian stocks dropped, with the regional benchmark index heading for its biggest loss in two months. The Nikkei 225 (NKY) Stock Average slid the most since May, while Chinese shares fell for the first time in three days.

Honda Motor Co. (7267), an automaker that gets 81 percent of its sales overseas, sank 3 percent in Tokyo as a stronger yen dimmed the outlook for exporters. GS Yuasa Corp., a supplier of lithium batteries to Boeing Co., slumped 4.5 percent after All Nippon Airways Co. grounded its fleet of Boeing Dreamliners. Agricultural Bank of China Ltd., the nation’s No. 3 lender, fell 2 percent in Hong Kong after Premier Wen Jiabao said China should “gradually” establish a property tax system.

The MSCI Asia Pacific Index slid 0.7 percent to 131.74 as of 7:02 p.m. Tokyo time, with more than two stocks falling for each that rose. The gauge rallied 11 percent from Nov. 14 through yesterday as Japanese shares surged on speculation Prime Minister Shinzo Abe will pursue more aggressive stimulus policies and reports showed China’s economy is recovering and .

“We’re seeing shares at an overbought level after such a strong rebound recently,” said Nader Naeimi, Sydney-based head of dynamic asset allocation at AMP Capital Investors Ltd., which manages almost $126 billion. “The market just needs to consolidate before coming back. The fundamentals are looking better. It’s not going to be a deep correction, just some consolidation. Markets never go up in a straight line.”

Overheating Signs

The MSCI Asia Pacific Index (MXAP)’s 14-day relative strength index, an indicator of market momentum, reached 75 yesterday. A level above 70 is considered by some investors as a sign the shares have risen too far, too fast.

Shares on the Asian gauge traded at 14.2 times estimated earnings, compared with 13.3 for the Standard & Poor’s 500 Index and 12 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg News.

Japan’s Nikkei 225 dropped 2.6 percent, posting its biggest decline since May 18. The gauge retreated after yesterday climbing to its highest level since April 2010…”

Full article

“We’ve written a lot about the weakness of the Japanese yen, a move that’s associated with the country’s new Prime Minister, and his aggressive agenda of monetary and fiscal easing.

But actually, it’s more than just that.

In a note this evening, SocGen’s Sebastien Galy observes that shifts are underway not just in the yen (JPY) but also in the Swiss Franc (CHF) and the US dollar:

FX implied volatilities have been rising from ultra low levels, as they did pre-Lehman times. It is an important sign not of impending doom, but of a global reallocation of capital. Old regimes are dying and FX is the first sign of this process. We are seeing this in JPY, are starting to see this in CHF and will eventually see it happen in USD, hopefully in H2 or Q4 as the US economy steadily recovers. As capital is reallocated across the world, the allocation between bonds and equities as ultimate “domestic” claims to global growth will eventually also become more unstable. For now, these wobbles will be crushed as monetary policy remains very expansive globally, but the process started. FX is the warning sign.

The 2007-2012 crisis period has been characterized, in part, by extremely predictable correlations among a range of assets. So for example, a “risk on” period might be characterized by higher stocks, a weaker dollar, a higher aussie dollar, and so forth.

But now, for example, we’re seeing dollar strength coincide with a strong market.

And the Swiss Franc, which has been the favored “safe-haven” currency of Europe (everyone rushed into Switzerland) during the crisis is now losing luster, as people feel comfortable repatriating money back into the Eurozone.

In fact, EURCHF (the euro against the Swiss Franc) has been on a crazy tear in just the last few days…”

Full article and charts

“The Australian dollar slid versus most of its 16 major peers before a report this week that may show an increase in unemployment, adding to signs of weakness in the domestic economy.

Australia’s currency fell against the dollar on prospects employers in the South Pacific nation last month added the fewest jobs since a decline in August. Both the so-called Aussie and itsNew Zealand counterpart, known as the kiwi, tumbled from the highest levels in more than four years versus the yen after comments by Japan’s economy minister stoked speculation the country won’t try to spur further losses in its currency.

“There is underlying weakness in the labor market,” said Andrew Salter, a currency strategist in Sydney at Australia & New Zealand Banking Group Ltd. (ANZ) “If we do a get a weaker unemployment read, the market will look to take the Aussie lower.”

The Australian dollar fell 0.2 percent to $1.0549 as of 4:45 p.m. in Sydney after rising 0.3 percent yesterday. It touched 94.66 yen, the highest since August 2008, before trading at 93.83, 0.8 percent below the close in New York. New Zealand’s currency, known as the kiwi, lost 0.3 percent to 84.05 U.S. cents. It slid 0.9 percent to 74.75 yen after earlier reaching 75.53, the strongest since September 2008..”

Full article

“The yen gained the most in eight months against the dollar after Japan’s economy minister said the nation faces risks from excessive declines. U.S. stock-index futures fell, while platinum reached a three-month high and Spanish notes rose after a debt sale.

The yen strengthened 1.1 percent 88.54 per dollar at 8 a.m. in New York after climbing 1.3 percent. South Africa’s rand slipped against its 16 major peers, while platinum jumped 1.9 percent. Standard & Poor’s 500 Index futures slid 0.4 percent and the Stoxx Europe 600 Index lost less than 0.1 percent. Lonmin Plc, the world’s third-largest platinum producer, rallied to a three-month high. Spanish securities rebounded after the country sold more debt than targeted and 10-year Treasuries rose for a third day.

Economy Minister Akira Amari warned of harmful effects “if the yen excessively weakens” in Tokyo today. Treasury SecretaryTimothy F. Geithner warned yesterday of severe economic hardship should Congress fail to raise the debt ceiling that lawmakers have increased or revised 79 times since 1960, including 49 times under Republican presidents. Anglo American Platinum Ltd. said it will idle four shafts in South Africa, cutting output by 400,000 ounces a year after a review of its operations.

“The world has gone massively short yen on the idea that Japan is going to be more aggressive with its stimulus under the new prime minister,” said Imre Speizer, an Auckland-based strategist at Westpac Banking Corp. “Comments like Amari’s are likely to spook those holding yen shorts.” A short position is a bet a security will decline in value….”

Full article

“The yen weakened to a 20-month low against the euro as traders prepared for more monetary stimulus from the Bank of Japan. (8301) Wheat led commodities higher, while Chinese stocks rose the most in a month as regulators said foreign-investment quotas can increase.

The yen depreciated 0.3 percent to 119.36 versus the euro at 6:15 a.m. in New York after dropping to 120.13. U.S. Treasuries advanced, pushing 10-year yields one basis point lower to 1.86 percent. The Standard & Poor’s GSCI gauge of 24 raw materials rose 0.7 percent, with wheat gaining 2.3 percent. The Shanghai Composite Index jumped 3.1 percent. The Stoxx Europe 600 Index increased 0.1 percent and S&P 500 Index (SPX) futures added less than 0.1 percent….”

Full article

Source

“The Australian dollar weakened from a level that matched the highest in almost four months as technical indicators signaled gains in the currency may have been too rapid.

The so-called Aussie slid versus most of its 16 major counterparts after data showed inflation inChina, the South Pacific nation’s biggest trading partner, quickened more than expected and spurred concern policy makers will struggle to balance price gains and growth. New Zealand’s currency retreated from a three-week high as Asian stocks pared an earlier advance.

“The fact that the Aussie struggled so hard to break through the $1.06 level and didn’t quite make it made people wonder whether it’s due for a little bit of a pullback,” said Sean Callow, a senior currency strategist at Westpac Banking Corp. (WBC) in Sydney. “It’s broadly going to be supported on dips.”

The Australian dollar lost 0.1 percent to $1.0584 as of 4:55 p.m. in Sydney after earlier rising to $1.0599, matching the high reached yesterday that was the strongest level since Sept. 14. It gained 0.2 percent to 94.29 yen. New Zealand’s dollar touched 84.61 U.S. cents, the most since Dec. 17, before trading at 84.26, 0.4 percent lower than yesterday’s close. It bought 75.06 yen from 75.08 in New York.

The MSCI Asia Pacific Index (MXAP) of shares was little changed from yesterday earlier gaining as much as 0.3 percent…”

Full article

“The euro strengthened for the first time in three days against the dollar after Spain sold more than the maximum target at its first debt auction of the year, boosting demand for the region’s assets.

The 17-nation currency rose toward an 18-month high versus the yen as the European Central Bank refrained from cutting interest rates at a meeting today amid signs the debt crisis is easing. ECB President Mario Draghi will hold a news conference at 2:30 p.m. in Frankfurt to explain the decision. The yen fell for a second day against the dollar on bets Japanese policy makers will boost stimulus that tends to weaken the currency. Australia’s currency gained after Chinese imports increased.

“The euro has rallied with decent bond sales from Spain,” said Peter Frank, global head of foreign-exchange strategy in London at Banco Bilbao Vizcaya Argentaria SA. (BBVA) “There’s not really appetite for a rate cut yet. The market will be looking to the press conference. If Draghi is less dovish than in December we could see a bit more support for the euro.”

The euro gained 0.3 percent to $1.3108 at 12:47 p.m. London time after dropping 0.4 percent during the previous two days. The shared currency rose 0.7 percent to 115.65 yen after appreciating to 115.99 on Jan. 2, the strongest since July 2011. The yen fell 0.4 percent to 88.20 per dollar.

The Spanish Treasury in Madrid raised 5.82 billion euros from the sale of three bond issues, exceeding its upper target of 5 billion euros. The auctions included a new two-year note with so-called collective-action clauses limiting investors’ rights to oppose writedowns….”

Full article

“Australia’s dollar gained to its strongest since September 2008 versus the yen and a three-week high versus the greenback as Chinese data showed imports rose to a record in the nation’s biggest overseas market.

The New Zealand dollar, known as the kiwi, climbed to the highest level in more than four years against the yen as Asian stocks advanced for a second day on Chinese growth optimism.

“The Chinese data is a whole lot better than anyone expected with both imports and exports accelerating,” said Mike Jones, a currency strategist at Bank of New Zealand in Wellington. “That will only add to recent investor optimism that the Chinese rebound has got legs and should take the Aussie dollar higher.”

Australia’s currency climbed 0.3 percent to $1.0552 as of 4:31 p.m. in Sydney after touching $1.0555, its strongest since Dec. 18. The currency strengthened 0.7 percent to 93.03 yen, the most since September 2008.

New Zealand’s dollar gained 0.1 percent to 84.05 U.S. cents. It rose as high as 74.10 yen, the strongest since September 2008, before trading at 74.09 yen from 73.78 yesterday.

China’s exports rose 14.1 percent in December from a year earlier while imports increased 6 percent, leaving a trade surplus of $31.6 billion, the customs administration said today.

The pickup in shipments abroad compares with the 5 percent median estimate of analysts in a Bloomberg News survey and a projected 3.5 percent increase for imports….”

Full article

“The Bank of Japan (8301) may increase its fiscal 2014 inflation forecast at this month’s policy meeting as stimulus measures and a weaker yen boost growth prospects, according to people familiar with officials’ discussions.

The central bank may raise an October projection for an 0.8 percent increase in consumer prices excluding fresh food, the people said on condition of anonymity because the discussions are private. They didn’t specify a new number. The current forecast was made before Prime Minister Shinzo Abe took office last month, pledging aggressive measures to counter deflation…”

Full article

“Many large U.S. corporations derive 50%-65% of their revenues overseas. As the U.S. dollar rises, the foreign-exchange boost to overseas profits of the past decade will reverse.

Full article