Dollar Up Against Yen After Japan Announces Further Stimulus

(RTTNews) - The dollar is little changed in comparison to its major European competitors on Friday, but is gaining ground against the Japanese Yen, after Japan announced further economic stimulus measures.

The cabinet of Japanese Prime Minister Yoshihiko Noda on Friday approved a second round of economic stimulus in an attempt to jump start the economy ahead of the elections in December.

The new package, worth JPY 880 billion ($10.7 billion), is funded from the country's budget reserves, avoiding further debt sales. The package is more than double the size of the stimulus measures announced in October.

The dollar broke out to over a one-week high of Y82.738 against the Yen Friday, but has since eased back to around Y82.525.

Industrial production in Japan gained a seasonally adjusted 1.8 percent on month in October, the Ministry of Economy, Trade and Industry said in Friday's preliminary reading, rising for the first time in four months. The headline figure beat expectations for a decline of 2.0 percent following the 4.1 percent decline in September.

Japan's housing starts increased sharply for a second consecutive month in October, recovering from three straight months of contractions since June, data from the Ministry of Land, Infrastructure, Transport and Tourism showed Friday. Housing starts grew 25.2 percent year-on-year in October, accelerating from 15.5 percent rise in September. This was expected to rise at a slower pace of 10.1 percent.

The unemployment rate in Japan was a seasonally adjusted 4.2 percent in October, the Ministry of Internal Affairs and Communications said on Friday. The result was in line with expectations and unchanged from the previous month.

Core consumer prices in Japan were unchanged on an annual basis in October, the Ministry of Internal Affairs and Communications said on Friday. The result exceeded expectations for a 0.1 percent contraction, which would have been unchanged from the September reading.

Average household spending in Japan was down 0.1 percent on year in October, the Ministry of Internal Affairs and Communications said on Friday, standing at 284,238 yen. That beat forecasts for a decline of 0.8 percent following the 0.9 percent contraction in September.

The large imbalances in the euro area will make the conduct of monetary policy much more challenging, European Central Bank President Mario Draghi said on Friday.

The crisis has made it absolutely clear that large imbalances within the euro area can become a fundamental issue for the stability of economic and monetary union, he said in Paris.

A union of sovereign states can become fragile if some states are permanent creditors and others are permanent debtors. Such a situation undermines mutual trust.

The German Parliament has approved the latest bailout plan for Greece on Friday, by a wide margin.

Implementation of the commitments made by Greece and its European partners constitute the main challenge to the debt deal, agreed earlier this week, the International Monetary Fund said Thursday.

"Its success requires that both Greece and the European partners fully implement their commitments," IMF's External Relations Department Director Gerry Rice told reporters at a regular press briefing.

"Greek authorities plan to start the debt buyback process next week and we look forward to its implementation," Rice said.

The buck slipped to a low of $1.3027 against the Euro Friday, but has since bounced back to around $1.3000.

The euro area unemployment rate reached a fresh high in October as unfolding severe austerity forced both governments and companies to shed jobs. The jobless rate rose marginally to 11.7 percent, in line with expectations, from 11.6 percent in September, data from Eurostat showed Friday.

Providing some relief for consumers amid recession, inflation slowed more-than-expected to a two-year low in November. According to the flash estimate, inflation fell to 2.2 percent from 2.5 percent in October. The faster-than-expected slowdown reflects sharp slowdown in energy costs and in turn raises hopes that inflation will fall to the central bank's target range.

German retail sales declined at a sharper-than-expected pace in October as waning economic momentum and rising unemployment eroded consumer willingness to spend.

Retail sales fell 2.8 percent month-on-month on a calendar and seasonally adjusted basis in October, the Federal Statistical Office said Friday. Economists expected sales to fall 0.4 percent after a 0.5 percent gain in September.

France's producer price inflation for October came in line with economists' expectations, data released by the statistical office INSEE showed Friday. Producer prices for the French market rose 2.9 percent year-on-year. The figure matched economists' expectations.

Month-on-month, prices rose 0.5 percent, following a 0.4 percent gain in September. That exceeded economists' forecast for a 0.2 percent gain.

French consumer spending decreased in October, after remaining flat in the previous month, data released by the statistical office INSEE revealed Friday. Household spending dropped 0.2 percent month-on-month, after a flat reading in September and a 0.7 percent slump in August. Economists had also expected a 0.2 percent decline.

The greenback dipped to a low of $1.6061 against the pound sterling on Friday, but has since rebounded to around $1.6020.

Confidence among British consumers rose to its highest level in 18 months in November as they turned more upbeat over the prospects of their personal as well as general economic situation, a survey by GfK NOP showed Friday.

The headline index rose to -22 in November from -30 in October. This was the highest reading since May 2011 and better than forecasts for no change.

Personal spending in the U.S. unexpectedly showed a modest decrease in the month of October, according to a report released by the Commerce Department on Friday, with the data reflecting the impact of Hurricane Sandy.

The report showed that personal spending edged down by 0.2 percent in October after climbing by 0.8 percent in September. The drop came as a surprise to economists, who had expected spending to inch up by 0.1 percent.

The report also said personal income edged up by less than a tenth of a percent in October following a 0.4 percent increase in September. Economists had expected income to increase by about 0.3 percent.

After two months of contraction, Chicago-area business activity saw a modest expansion in the month of November, according to a report released by the Institute for Supply Management - Chicago on Friday.

The ISM Chicago said its business barometer edged up to 50.4 in November from 49.9 in October, with a reading above 50 indicating an increase in activity. Economists had been expecting the business barometer to inch up to 50.3.

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