European Leaders Huddling About Ukraine, Japanese GDP Exceeds Expectations, and U.S. & Canada Observing Holidays – Currency Thoughts
European Leaders Huddling About Ukraine, Japanese GDP Exceeds Expectations, and U.S. & Canada Observing Holidays
February 17, 2025
(204) Today is Presidents Day in the United States and Family Day in Canada. These holiday observances will make for a shortened day in global financial markets and are apt to sap them of leadership.
European leaders have been invited to Paris to discuss policy regarding the Ukraine war and the wider issue of regional security.
The preliminary estimate of quarterly real Japanese GDP growth last quarter of 2.8% at an annualized rate is twice as great as analysts were anticipating. That doubled year-on-year growth to 1.2% from a pace of 0.6% between the third quarters of 2023 and 2024. This was Japan’s third consecutive quarter of positive economic growth, and the annualized pace of expansion over between the first and final quarters of 2024 was 2.5%. In 2024 as a whole, however, GDP only eked out a rise of 0.1% compared to the average GDP level in 2023. The GDP price deflator advanced 2.9% in 2024, down from 4.6% in 2023. During the final quarter of 2024, economic activity was driven by net foreign demand, with exports advancing 4.3% annualized and imports contracting by 8%. Another growth driver was non-residential investment, up 1.9% expressed in annualized terms, and government spending grew for the third quarter in a row. Overall growth in the quarter was mitigated 0.9 percentage points by a runoff of inventories, and personal consumption was practically flat in the period.
Other Japanese data releases this Monday included a sharp downward revision of industrial production during December from +0.3% reported initially to -0.2% after a 2.2% dive in November. Consequently, much of the 2.8% advance in October was reversed in the final two months of 2024. Compared to a year earlier, industrial production fell by 1.6% in December and by 2.3% in full 2024. Capacity utilization sank 2.9% year-on-year in December and by 5.2% in 2024. Productive capacity fell 1.7% year-on-year in December, the fourth quarter, and full 2024. Finally, Japan’s tertiary index, which measures service sector activity, rose in December for the first time since October but by a mere 0.1%. The tertiary index increased 1.1% year on year both in December and 2024.
In overnight financial market action, the dollar fell 0.5% against the yen, which benefited from the view that the next Bank of Japan rate hike will happen sooner rather than later in light of the better-than-assumed fourth-quarter economic performance. In contrast, the European Central Bank is likely to be cutting rates further over the next couple of policy reviews, and Fed policy is on pause.
Against other currencies, the dollar on this U.S. holiday, ticked up 0.1% against the loonie, euro, and Swiss franc but dipped 0.1% overnight relative to sterling and the Australian dollar. The greenback’s biggest move was a 0.6% advance versus the Mexican peso.
Stock markets in the Pacific Rim closed up 2.9% in Indonesia, 1.5% in Taiwan, 0.8% in South Korea, and 0.1% in Japan. European equity bourses show gains so far today of 1.0% in Italy, 0.8% in Germany but just 0.3%, 0.2%, and 0.1% in Spain, the U.K., and France.
Ten-year sovereign debt yields have jumped six basis points higher in Germany and Great Britain, five bps in France and Spain, Four bps in Italy, and three basis points in Japan.
Gold‘s price is 0.4% firmer, while those of Bitcoin and oil have edged 0.1% lower.
Among other released data around the world, car sales in China fell 0.6% year-on-year in January, ending a streak of three months in which such posted gains. The manufacturing and service sector purchasing managers surveys of New Zealand each moved above the 50 breakeven level in January to a 23-month high of 51.4 and an 11-month peak of 50.4, respectively.
Euroland’s seasonally adjusted trade surplus widened to a 6-month high of EUR 14.6 billion in December. The surplus for 2024 as a whole of EUR 176.9 billion was little more than three times larger than the EUR 57.4 billion in 2023.
Other trade balance figures reported today revealed Italy‘s largest trade surplus in December (EUR 5.98 billion) since July and a 54.9 billion euro surplus in 2024 after EUR 34.5 billion in 2023; Spanish deficits of EUR 4.12 billion in December and EUR 40.3 billion in 2024; a January deficit in India of $22.49 billion, 28.5% larger than the deficit one year earlier; and an Indonesian trade surplus of $31.04 billion in 2024 versus, down from $36.9 billion in 2023.
Slovakian consumer price inflation increased last month to a one-year high of 3.9% from 2.9% in December and a recent low of 2.1% in June that matched the lowest inflation rate since May 2021.
Producer price inflation in Sri Lanka, which crested about 100% at 103.4% in August 2022, stayed below zero percent (-1.7% in December) for a third straight time.
Copyright 2025, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: Euroland trade balance, Japan GDP and industrial production, New Zealand purchasing manager surveys
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