US Dollar
Stock markets were mainly lower on Wednesday. Japanese Nikkei Stock Average dropped 0.2% after a number of unfavorable reports have been issued in Japan. The major US stock indices were almost flat yesterday as trading activity declines before the year-end. In the US we do not expect a lot of important data in the following three days, except probably some readings on the house market tomorrow. Although one another report showed yesterday the US economy is recovering as consumer confidence rose in December to an eight-month high. The Conference Board’s index increased to 64.5 from 55.2 in November. In the foreign exchange market the dollar is almost flat as well, with the dollar index currently staying slightly below 80.
Euro
As it was expected the euro is consolidating at 1.30-1.31 against the greenback at the year-end. In Asian trading hours the single currency traded at 1.3060-1.3075. Despite the trading volumes are relatively low the currency may drop to 1.30 if investors’ concerns about the region’s debt crisis deepen. Today Italy is scheduled to sell 9 billion euros of 179-day bills and as much as 2.5 billion euros of zero-coupon 2013 notes. Tomorrow the auction continues with bonds maturing in 2014, 2018, 2021 and 2022. In the secondary government debt market the nation’s 10-year bond yields climbed to the 7% threshold yesterday, the level that triggered Greece, Ireland and Portugal to seek bailouts.
Japanese Yen
Economic conditions in Japan worsened in November, several macroeconomic reports showed early in the morning. In particular industrial production, retail trade and household spending dropped even more than economists on average initially estimated: industrial production declined 4% (a 2% drop expected), retail trade decreased 2.3% (no change expected) and finally household spending fell 3.2 (a 1.2% drop expected) – all the changes on annual basis. Nevertheless the deceleration of the global economy has converted the Japanese yen into one of the most attractive currencies in 2011. Even at the year-end the yen is strengthening against the dollar – the pair fell to 77.75 in Asian trading hours from yesterday’s high at 78.02. The euro depreciated today against the yen as well to a one-week low – 101.57.
