The International Monetary Fund has improved its outlook for the USA economy in a sign that the world’s largest economy may have reached a turning point and is poised for stronger growth almost five years since the devastating recession. The IMF forecast in October that the U.S. economy would expand 2.6 percent in 2014 after growing 1.6 percent this year. At the time, Lagarde warned that Congressional failure to raise the U.S. debt ceiling could damage not only the United States, but the rest of the global economy.
Italian consumer morale hits six-month low
In Italy, still one of the seventh largest economies globally, morale amongst consumers has fallen this month to a six-month low according to data published this morning by the official body ISTAT. Despite Italians being more optimistic about the future prospects for Italy’s economy, they are down over the state of their personal finances, and the situation today, this after the recession which began more than two years ago.
National statistics bureau ISTAT’s headline consumer confidence index fell to 96.2 in December from a revised 98.2 in November. The sub-index measuring the state of people’s personal finances fell from 101.1 to 97.3, while the measure of current conditions slipped to 95, from 99.2 last month.
Hedge funds increase their bets versus yen
Hedge funds and other large speculators increased bets the yen will decline against the U.S. dollar to almost the highest level since July 2007, figures from the Washington-based Commodity Futures Trading Commission show. The difference in the number of wagers on a decline in the yen compared with those on a gain, net shorts, was 130,223 on Dec. 17th, compared with net shorts of 129,711 a week earlier.
German Import prices in November 2013: –2.9% on November 2012
As reported by the Federal Statistical Office (Destatis), the index of import prices decreased by 2.9% in November 2013 from the corresponding month of the preceding year. In October and in September 2013 the annual rates of change were –3.0% and –2.8%, respectively. From October 2013 to November 2013 the index increased by 0.1%. The index of import prices, excluding crude oil and mineral oil products, was 2.3% below the level of a year earlier. The index of export prices decreased by 1.1% in November 2013 from the corresponding month of the preceding year.
Chinese banks’ cash squeeze fails to derail mood of optimism in global markets
China’s cash squeeze worsened on Monday despite the central bank’s repeated attempts to satisfy the financial markets with emergency money injections. The seven-day bond repurchase rate, a gauge of short-term liquidity, climbed to 8.8 per cent in early trading, up about 60 basis points from its average on Friday, a signal that banks are hoarding cash.
Market snapshot at 10:00 am UK time
The majority of the Asian-Pacific equity markets ignored the issues in the Chinese interbank market in order to replicate the gains seen in US markets on Friday, equities in Japan were held back by a rise in the yen versus the US dollar. Hong Kong’s Hang Seng index rose 0.7 per cent while China’s Shanghai Composite edged up 0.2 per cent. Other Asia Pacific markets also rose in tandem, with the Nikkei closing up marginally by 0.07%. Looking at European markets the STOXX 50 is currently flat, CAC down 0.06%, DAX up 0.32%, FTSE up 0.39%.
Looking towards the New York open the DJIA equity index future is up 0.27%, the SPX up 0.35%, with the NASDAQ future up 0.63%. NYMEX crude is down 0.37% at $98.95 per barrel, NYMEX nat gas is up 2.32% at $4.52 per therm, COMEX gold is down 0.08% at $1202.70 per ounce with silver on COMEX down 0.27% at $19.40 per ounce.
Forex focus
The greenback bought 104.02 yen early in London from 104.10 on Dec. 20th, when it reached 104.64, the highest since October 2008. It fell 0.1 percent to $1.3685 per euro. Japan’s currency was at 142.34 per euro from 142.32.
The U.S. Dollar Index, which tracks the U.S. currency against 10 major counterparts, was little changed at 1,020.87 after rising 0.5 percent last week. The measure is up 3.5 percent this year. The dollar extended its retreat from a five-year high versus the yen amid speculation investors are closing their bets on any further gains before the year-end.
The pound climbed 0.2 percent to $1.6371 early London time after rising to $1.6484 on Dec. 18th, the highest since Aug. 2011. The U.K. currency was little changed at 83.64 pence per euro after appreciating 0.8 percent in the five-day period ended Dec. 20th. The pound approached a two-year high versus the dollar after Bank of England policy maker Andrew Bailey said the central bank may take steps to prevent U.K. house prices from rising too quickly.
