The dollar is trading nearly unchanged against all of its major competitors at the start of the new trading week. The U.S. currency made strong gains on Friday, following the release of the stronger than anticipated employment report for February.
Fitch Ratings on Friday downgraded the credit ratings for Italy, stating that the continued political stalemate after the inconclusive elections last month may deliver an adverse shock to the already crippled economy.
Fitch lowered Italy’s long-term foreign and local currency Issuer Default Ratings (IDR) to ‘BBB+’ from ‘A-‘. The Outlook on the Long-term IDRs is ‘negative.’
In a statement, the rating agency said “the inconclusive results of the Italian parliamentary elections on 24-25 February make it unlikely that a stable new government can be formed in the next few weeks.”
“The increased political uncertainty and non-conducive backdrop for further structural reform measures constitute a further adverse shock to the real economy amidst the deep recession,” it added.
The German Finance Ministry plans to cut net borrowing next year, more deeply than projected in the government’s medium-term plan, Der Spiegel reported on Sunday citing government sources. The borrowing will be reduced to EUR 6-8 billion in 2014 from EUR 17.1 billion planned for this year.
Lower interest rates are not being passed on fully by banks in some countries, Vitor Constancio, Vice-President of the European Central Bank said Monday. As bank funding is tight, rate reductions are passed on hardly, making credit unduly expensive in some parts of the euro area, said Constancio in a speech at Chatham House, London.
The dollar is slightly lower against the Euro on Monday, trading around the $1.3010 level, compared to Friday’s high of $1.2954.
Germany’s exports grew at the fastest pace since August 2012 and imports recovered strongly in January, boosting hopes of recovery at the start of the year. Shipments grew 1.4 percent in January from a month ago, when it rose 0.2 percent, data from the Federal Statistical Office showed Monday. The increase in exports far exceeded the 0.5 percent rise forecast by economists.
Likewise, imports advanced 3.3 percent, sharper than the 0.7 percent growth expected by economists. Moreover, the import performance reversed December’s 1.5 percent drop. The import growth outpaced the export growth in January.
The trade surplus increased less than expected to EUR 13.7 billion in January from EUR 12.1 billion in the previous month. The surplus was expected at EUR 14.4 billion.
France’s industrial production declined more than expected in January, the latest figures from statistical office Insee showed Monday. Production fell 3.5 percent year-on-year in January, compared to expectations for a 2.8 percent decline. Also, the rate of fall was steeper than the 1.9 percent decrease in the previous month.
The greenback is up slightly against the pound sterling on Monday, rising to around $1.4900, from Friday’s high of $1.5042.
Haruhiko Kuroda, the Japanese government’s nominee for the next central bank governor, on Monday vowed to use all options to reach the 2 percent inflation target and also stressed the need for a faster expansion in stimulus.
At a confirmation hearing to a committee of the Upper House of the Parliament, Kuroda, who currently heads the Asian Development Bank, said that the Bank of Japan’s efforts so far to exit deflation have not been sufficient and that he will take every measure possible to achieve the 2 percent inflation target.
Bank of Japan board member Koji Ishida said Monday that that Japan can achieve the 2 percent inflation target, if the bank proceeds with powerful monetary easing along with measures to boost the economy’s growth potential.
The buck is basically flat in comparison to the Japanese Yen on Monday, hovering around the Y96.200 level.
Core machine orders in Japan plummeted a seasonally adjusted 13.1 percent on month in January to 654.4 billion yen, the Cabinet Office said on Monday – falling for the first time in four months. The headline figure was well shy of forecasts for a decline of 1.7 percent following the 2.8 percent increase in December.
by RTT Staff Writer
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