The dollar has bounced back to nearly unchanged against the Euro on Friday and is also rising against both the pound sterling and the Japanese Yen. There is little news driving the action at the end of the trading week. Equity markets are attempting to rebound from recent weakness today.
Slovenia does not require a bailout as the country is implementing structural reforms, President Borut Pahor told French daily Le Figaro in an interview.
Moreover, its debt stands at 59 percent of gross domestic product this year. The size of the Slovenian banking sector is equivalent to 130 percent of GDP against 800 percent in Cyprus, Pahor noted.
He said one of the three major national banks will be privatized and it will be opened to foreign investment.
The European Central Bank said that 29 banks will repay EUR 10.9 billion of three-year loans next week. Next Wednesday, 14 banks will repay EUR 8.87 billion of long term financing operations or LTRO issued late 2011 and 15 banks will pay EUR 2.1 billion of the second tender. This will take total repayment by banks to EUR 274.6 billion from EUR 263.6 billion.
The European Central Bank clearly has room to maneuver, but it will be for them independently to determine when is the right time to use that space, International Monetary Fund Managing Director Christine Lagarde said Thursday.
“Of all the major central banks in the world, clearly the ECB is the one that still has room to maneuver,” she said at a press briefing ahead of the Spring Meetings of the IMF and World Bank in Washington.
“It will be for them independently to determine when is the right time to use that space and potentially reduce interest rates,” Lagarde said while responding to a query on lack of credit supply to small- and medium-size enterprises in euro area.
“What is more critically important is to make sure that there is fluid transmission between central banks and banks, and amongst banks,” so that the monetary tools that the ECB could use are properly transmitted, and the lower rates can actually translate into lower rates for the small- and medium-size enterprises, she said.
The dollar fell to a low of $1.3128 against the Euro on Friday, but has since bounced back to around $1.3060, nearly unchanged for the session.
The Eurozone current account surplus increased more than expected in February largely due to a notable fall in current transfer shortfall, the European Central Bank said Friday. The current account surplus totaled seasonally adjusted EUR 16.3 billion, up from EUR 13.8 billion in the previous month. It was forecast to rise to EUR 14.5 billion.
Germany’s producer price inflation weakened more than economists expected in March, owing mainly to a decline in energy prices, latest data showed Friday.
The producer price index increased 0.4 percent on an annual basis in March, notably slower than February’s 1.2 percent gain, the Federal Statistical Office said. Economists were looking for a 0.7 percent increase.
British consumers’ appetite for spending may not be enough to save the economy from slipping back into recession in the first quarter, given the unimpressive performance of most of the major sectors, Capital Economics UK Economist Martin Beck said Friday.
Though the consumer spending data provide a positive picture, rising unemployment and an increasingly severe squeeze on real pay would continue to weigh on UK’s retail sales in the coming months, which recorded a decline in March, the firm said.
According to the economist, positive retail sales data from other surveys like the one conducted by the BRC were influenced by the impact of March’s early Easter, and do not reflect real growth in the sector.
The greenback dropped to a low of $1.5367 against the pound sterling Friday, but has since climbed to around $1.5230.
Confidence among British households regarding the value of their homes rebounded in April, ending the downward trend seen for nearly three years, helped mainly by improved optimism regarding the governments’ recently launched mortgage scheme, data from a survey by Markit Economics and Knight Frank showed Friday. The house price sentiment index increased to 50.6 in April from 50 in March.
Bank of Japan Governor Haruhiko Kuroda on Thursday reiterated that the central bank’s stimulus program was not intended to weaken the yen. The central bank’s recent monetary easing was to achieve domestic policy goals and to meet 2 percent inflation at the earliest possible time, he told reporters in Washington, where he is attending the Group of Twenty meeting.
Japan’s Finance Minister Taro Aso said Thursday that the leaders of the Group of Twenty nations did not raise any objection to its monetary easing measures during their meeting in Washington. He said Japan has made it clear to the G20 that the policies were aimed at achieving price stability and that they are not targeted at yen.
The buck rose steadily against the Japanese Yen in early trade Friday and has leveled off around the Y99.100 level.
A leading indicator of the Japanese economy increased more than initially estimated in February, final data released by the Cabinet Office showed Friday. The leading economic index increased to 97.6 in February from 95 in January. Preliminary estimated had shown a more modest rise to 97.5.
Japan saw a merchandise trade deficit of 362.421 billion yen in March, the Ministry of Finance said on Thursday. That beat forecasts for a shortfall of 522.2 billion yen following the downwardly revised deficit of 779.5 billion yen in February.