The dollar has weakened against both the Euro and the Japanese Yen on Tuesday and is nearly unchanged compared to the pound sterling. The looming fiscal cliff remained in focus, with little if any progress being made in the negotiations. Republicans put forth a plan that would raise $800 billion in new revenue from taxes. However, the plan was rejected by the White House, largely due to the lack of a tax increase on the wealthy.
Almost all the countries in Southern Europe will continue to see their economies contracting in 2013, European Central Bank policymaker Ewald Nowotny reportedly said Tuesday.
The trend of negative growth rates in these economies will continue into 2013, reports said citing Nowotny’s remarks in Vienna. Meanwhile, other economies will continue to record low growth levels, Nowotny said.
Eurogroup Chairman Jean-Claude Juncker has called on Cyprus and its creditors to reach an agreement on the terms of the proposed bailout “in a timely manner,” while offering to discuss the matter with Eurozone finance ministers as early as next week.
“I call on Cyprus and the Troika to conclude on the proposed terms of a programme in order to reach agreement on an adjustment package in a timely manner,” he said in a statement issued after the Eurozone finance ministers meeting on Monday.
Juncker said the Eurogroup will discuss the capital needs of Cyprus’ financial sector and its implications for program financing on December 13.
Juncker also confirmed that Spain will receive EUR 39.5 billion from the euro area bailout fund to recapitalize its banks by next week. Earlier on Monday, Spain had forwarded an official request for more aid for its ailing banking sector.
The dollar has been declining against the Euro for nearly 3 weeks, pulling back from a high of $1.2659 on November 12th, to a month and a half low of $1.3106 on Tuesday.
Producer price inflation in the euro area slowed less than economists expected in October, data released by statistical office Eurostat showed Tuesday. Producer price inflation eased to 2.6 percent in October from 2.7 percent each in September and August. Economists had forecast a faster slowdown to 2.5 percent.
Germany’s third quarter exports increased from the same quarter last year, data from the Federal Statistical Office showed on Tuesday.
Exports rose by 3.6 percent to EUR 275 billion in the third quarter, largely driven by shipments to countries outside the European Union. Shipments to these countries surged 9.9 percent to EUR 122.3 billion and their share of total German exports rose to 44.4 percent.
The British Chambers of Commerce on Tuesday downgraded U.K. growth forecasts for 2013 and 2014, citing public spending cuts and slow global growth, but upgraded the outlook for this year, which was the first upward revision since March 2011.
In its latest economic forecast, the BCC downgraded the growth forecast for 2013 to 1 percent from 1.2 percent, and the 2014 estimate to 1.8 percent from 2.2 percent. For 2012, the BCC projects 0.1 percent contraction, which is better than the 0.4 percent fall previously estimated in September.
The Bank of England said the appropriate international authorities should study the bankers’ remuneration codes. The interim Financial Policy Committee of the BoE said the bankers’ remuneration should reflect the full risks the management was taking.
The buck dropped to a 1-month low of $1.6130 against the pound sterling Tuesday, but has since bounced back to around $1.6090.
Retail sales in the UK saw only a modest improvement in November as shoppers opted to wait for more bargains in the run-up to Christmas, a survey by the British Retail Consortium (BRC) revealed Tuesday. Retail sales values rose 0.4 percent on a like-for-like basis in November compared to a year earlier. On a total basis, sales were up 1.8 percent.
The UK’s construction sector activity contracted unexpectedly in November, a survey by Markit Economics and the Chartered Institute of Purchasing & Supply (CIPS) revealed Tuesday. The headline Purchasing Managers’ Index for the construction sector fell to 49.3 in November from 50.9 in the previous month. This is the lowest level of the index since August.
The greenback has extended its recent losses against the Japanese Yen, pulling back from a high of Y82.738 on November 30th, to around Y81.790 on Tuesday.
Japan’s average wages increased in October, preliminary data from the Ministry of Health, Labour and Welfare showed Tuesday. Total cash earnings rose 0.2 percent year-on-year in October following 1.5 percent fall in September.