Summary
- Canadian dollar reverses weekly loss as shares surge.
- 10-Year Treasury yield remains firm above 4.33%.
- U.S. Purchasing Manager’s Indexes non-eventful.
- Japan’s government will watch Forex with sense of urgency, says Suzuki.
- Great British pound trims gains after U.K. Purchasing Managers Index, trades up 0.4% at 1.2709 to highest level since February 2.
- Krone and krona climb as risk currencies lead group of G-10 gains.
- $9 Billion 30-year TIPS sale draws 2.20%, highest auction yield since 2010.
- Currencies rise on weak dollar; won gains after Bank of Korea.
- U.S. weekly jobless claims at 201,000 last week; estimate 216,000.
- EIA: Crude +3,514 Bbl, median estimate +3,750 Bbl.
Noteworthy
- U.S. Dollar Erases Losses, Norwegian Krone Drops Broadly, Euro-zone Inches Closer to Recovery Sans Germany
The euro-zone continues to climb out of its economic downturn in February despite a bleak outlook for the key industrial sector in Germany, according to a purchasing managers’ survey published Thursday.
The HCOB Flash Eurozone Composite PMI Output Index—a gauge of activity in the manufacturing and services sectors—rose to 48.9 in February from 47.9 in January, marking the slowest rate of downturn in eight months. Economists polled by The Wall Street Journal previously expected a slighter increase to 48.5.
“There is a glimmer of hope as the eurozone inches toward recovery,” HCOB economist Norman Liebke said. “This is particularly noticeable in the services sector,” he said.
While the index for services in the currency union recovered to 50.0—marking the threshold between contraction and expansion—the manufacturing index unexpectedly fell back a little to 46.1. Germany, the bloc’s keystone economy, booked a further downturn in its ailing manufacturing sector, dragging overall activity.
The figures “crush hopes of a sustained recovery in manufacturing supporting a recovery in private-sector activity,” economist Melanie Debono at Pantheon Macroeconomics said in a note.
“Germany is in trouble,” Debono said.
Business confidence for the year ahead improved notably in the 20-member bloc, boosting employment levels, and adding to signs that the downturn is moderating, HCOB said. But industrial confidence in Germany moved in the opposite direction, growing bleaker for the first time in three months. And improvement in services can’t compensate for the manufacturing industry’s weakness, Liebke said. “German industry is feeling pretty bleak now.”
By contrast, the composite index in France improved more than expected, drawing closer to expansion amid improvement in both services and manufacturing. Services exports were strong, with a rebound in tourism, Liebke said.
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