Dollar Weakening Against Yen After GDP Data Disappoints

(RTTNews) - The dollar is losing ground against the Japanese Yen Friday, following the weaker than anticipated U.S. GDP report for the fourth quarter. The Yen is benefitting from its safe haven status and some positive Japanese economic data. However, the U.S. currency is gaining ground against its major European competitors, due to the release of some weak European economic data.

The buck also soared against the ruble after the Russian Central Bank unexpectedly cut interest rates and surged against the Loonie after the weak Canadian GDP report.

Economic activity in the U.S. continued to increase in the final three months of 2014, according to a report released by the Commerce Department on Friday, although the pace of growth slowed by more than economists had expected.

The report said U.S. gross domestic product climbed by 2.6 percent in the fourth quarter following the 5.0 percent jump seen in the third quarter. Economists had called for GDP to increase by a somewhat more substantial 3.2 percent during the quarter.

Chicago-area business activity unexpectedly grew at a faster pace in the month of January, according to a report released by MNI Indicators on Friday, with the Chicago business barometer rebounding following two consecutive monthly declines.

The report said the Chicago business barometer climbed to 59.4 in January from a revised 58.8 in December, with a reading above 50 indicating growth in regional business activity. The increase by the business barometer came as a surprise to economists, who had expected the index to drop to a reading of 57.7.

While the University of Michigan released a report on Friday showing a modest downward revision to its reading on U.S. consumer sentiment in the month of January, the index remained at an eleven-year high. The report said the consumer sentiment index for January was downwardly revised to 98.1 from the mid-month reading of 98.2.

The consumer sentiment index still remains well above the final December of 93.6 and is at its best level since reaching 103.8 in January of 2004.

The dollar has fallen to around Y117.525 against the Japanese Yen Friday afternoon, from yesterday's high of around Y118.450.

Industrial output in Japan collected a seasonally adjusted 1.0 percent on month in December, the Ministry of Economy, Trade and Industry said on Friday. That missed expectations for an increase of 1.2 percent following the 0.5 percent contraction in November.

Consumer prices in Japan were up 2.4 percent on year in December, the Ministry of Internal Affairs and Communications said on Friday - topping expectations for 2.3 percent and unchanged from November.

Core CPI, which excludes the volatile costs of food, added 2.5 percent. That was below forecasts for 2.6 percent and down from 2.7 percent in the previous month.

The unemployment rate in Japan was a seasonally adjusted 3.4 percent in December, the Ministry of Internal Affairs and Communications said on Friday. That beat forecasts for 3.5 percent, which would have been unchanged from the November reading.

Japan's housing starts declined slightly less-than-expected in December, figures from the Ministry of Land, Infrastructure, Transport and Tourism showed Friday. Housing starts fell 14.7 percent annually in December, after a 14.3 percent decline in the previous month. Economists had forecast a 14.8 percent decrease for the month.

The average of household spending in Japan was down 3.4 percent on year in December, the Ministry of Internal Affairs and Communications said on Friday, standing at 332,363 yen. That missed forecasts for a decline of 2.3 percent following the 2.5 percent annual contraction in November.

The greenback fell to a low of $1.1363 against the Euro Friday morning, but has since rebounded to around $1.1290.

Eurozone consumer prices declined for the second straight month in January largely due to lower energy prices, posting the biggest annual fall since 2009. The harmonized index of consumer prices in the 19-nation currency bloc fell 0.6 percent year-on-year in January, with a similar rate of decline last seen only in July 2009. Final data is due on February 24.

This was the second consecutive fall in prices and exceeded the 0.5 percent drop forecast by economists. Prices were down 0.2 percent in December, which was the first decline since October 2009.

Germany's retail sales rose at a slower than expected rate in December, preliminary data from Destatis showed Friday. Sales grew a calendar and seasonally-adjusted 0.1 percent month-on-month in December following the 0.5 percent gain in November. Economists had expected sales to increase 0.3 percent.

The euro area jobless rate fell unexpectedly to the lowest level since August 2012, yet remains elevated. The unemployment rate came in at a double-digit 11.4 percent in December, slightly down from 11.5 percent in November. It was expected to remain unchanged at 11.5 percent in December.

The leading index for Eurozone, which measures future economic activity, increased for the second straight month in December at a stable rate, a report from the Conference Board showed Friday. The Conference Board leading economic index rose 0.2 percent in December, same increase as in the previous month. In October, the index dropped 0.1 percent.

French consumer spending grew at a fastest pace in nearly three years during December, led by a marked rebound in energy consumption, figures from the statistical office INSEE revealed Friday.

Household consumption rose 1.5 percent from November, when it grew 0.2 percent, revised down from 0.4 percent. Economists had forecast only 0.5 percent growth for the month. The latest consumption growth was the biggest since February 2012, when it was 2.4 percent.

The buck hovered around the $1.5080 level against the pound sterling Friday morning, but has since climbed to around $1.5040 this afternoon.

U.K. mortgage approvals increased in December from a 17-month low in the prior month, the Bank of England reported Friday. The number of mortgages approved for house purchases rose to a 3-month high of 60,275 from 58,956 in November. It was forecast to rise slightly to 59,000 in December.

An index measuring consumer confidence in the United Kingdom increased more than expected, turning positive in January, the latest survey from polling company GfK revealed on Friday. The consumer confidence index came in at 1 in January, turning positive unexpectedly as economists forecast the index to come in at -2. This follows the nine-month low score of -4 in December.

Russia's central bank on Friday unexpectedly cut the key interest rate by 200 basis points to 15 percent. Economists had expected the central bank to leave rates unchanged this month.

On December 15, the Bank of Russia hiked the rate to 17 percent from 10.5 percent in a surprise move, just a week after raising it by 100 basis points. The hikes were aimed at limiting the slide in the ruble and risks to inflation, the bank had said.

The ruble declined to a 1 1/2 month low of 71.72 against the greenback Friday, compared to Thursday's closing value of 68.44. The dollar is currently worth around 69.10 rubles this afternoon.

The greenback rose to $1.2797 against the Canadian dollar Friday, its highest level since March of 2009, from a low of $1.2610. The buck has eased back to around $1.2665 this afternoon.

Canadian economic growth turned negative in November, due to declines in manufacturing, mining, and oil and gas extraction. Data from Statistics Canada showed that GDP fell by 0.2 percent in November, following a 0.3 percent advance a month earlier. The growth was expected to be flat on month.

Annually, the economy grew 1.9 percent, less than the 2.1 percent rise expected by the economists. The GDP growth was 2.3 percent in October. The annual rate was the slowest since March 2014.

Copyright(c) 2024 RTTNews.com, Inc. All Rights Reserved