Financial markets gained modestly as optimism on US' employment market was offset by disappointing European economic data. Wall Street gained with the DJIA and the S&P 500 indices adding +0.35% and +0.32% respectively. On the commodity sector, crude oil prices rose with the front-month WTI contract -0.12% while the Brent contract slipped -0.57% during the day. The benchmark Comex gold contract edged higher but remained hovering slightly above 1550.
In France, industrial production dropped -1.2% m/m in January with manufacturing down -1.4% m/m. Worse still, it seems that output contraction in France would not end soon given the level of the manufacturing PMI. In Italy, the economy contracted -0.9% q/q in 4Q12 while the annual rate revised lower to a decline of -2.8% from -2.7%. Over the weekend, Fitch downgraded Italy's debt by one notch to BBB+ with a negative outlook. These issues sent the country's equities and debts lower. Another debt-ridden country, Greece, recorded an upward revision in the 4Q12 GDP which now slumped -5.7% y/y, instead of -6.0%. Elsewhere, it's reported that Cyprus has accepted bailout conditions from the ECB/EU/IMF Troika. Cyprus has requested a rescue fund totaling 17B euro, equivalent to the country's annual GDP.
In Japan, the yen plummeted to the lowest level in more than 3 years against the US dollar on BOJ easing expectations. Kikuo Iwata, the Japanese government's nominee as next deputy BOJ governor, indicated that the central bank would continue with easing monetary measures. The BOJ minutes for the February meeting unveiled that some of the board members suggested that that buying JGBs with longer remaining maturities can be considered in the future although the central bank decided to maintain the status quo during the month.
We will have two major central bank meetings later this week. The RBNZ is expected to leave the OCR unchanged at 2.5% but might release a more hawkish statement due to improvements in the housing markets in recent months. The SNB would also leave its monetary policy unchanged. It would also maintain its stance to keep the floor of EURCHF at 1.2. the central bank purchased CHF 188B in foreign currencies last year.
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