The Euro fell against its American counterpart, as Investors feared the deal in Cyprus, which caused big losses for depositors above EUR 100,000 instead of taxpayers, could be a blueprint for future bank bailouts for other Eurozone countries. On Thursday, Cyprus banks reopened after closing for nearly two weeks but with tight capital controls in order to avert a bank run. On Friday, the President of Cyprus said, “the risk of bankruptcy was over and the country did not intend to leave the European Union.”
The Euro currency endured a volatile week. Euro opened the week at 1.2971, only to rally toward 1.3048 where it found resistance. The Euro later lost its steam and fell to a 4-month low of 1.2750 as jitters overs the Cyprus bailout plan loomed across Europe, the Euro closed the week at 1.2818.
The Sterling Pound had its biggest quarterly drop against the dollar in more than four years as economic contraction fueled concerns on an unprecedented triple-dip recession, last week the Pound traded quietly with a tight range of 1.5096-1.5267, the Pound closed for the week at 1.5205.
The Japanese Yen maintained its longest streak of monthly losses in more than 12 years, on prospects that Bank of Japan Governor would boost stimulus measures at a policy meeting on the 4th of April, in order to combat deflation. The Yen traded within a tight range last week with a high of 94.96 and a low of 93.53.
US Monthly Core Durable Goods Orders
Durable goods orders rallied 5.7 percent in February as demand for transportation equipment improved, the Commerce Department said. The rise in orders reversed January’s 4.3 percent drop and beat economists’ expectations of a 3.8 percent rise. Although orders for core capital goods, excluding aircraft, a closely watched alternative for business spending activities, posted their largest decline since last July. Economist did not read much into this data, as the latest drop was a partial retracement of the unsustainable big gains the month before.
US New Home Sales
Pending Home Sales Index, based on number of contracts signed last month, dropped 0.4 percent to 104.8 in February from a downwardly revised 105.2 in January, but remained nearly at its three-year high. Economist attributed the drop in the number of contracts to buy previously owned US homes on the lack of homes available for sale, but there is little to suggest that the housing market’s recovery is stalling.
US Unemployment Claims
The number of Americans filing new claims for unemployment benefits rose last week, but not enough to suggest the momentum in the labor market recovery was slowing down. Jobless claims rose more than expected last week, increasing by 16,000 to a seasonally adjusted 357,000. The one month moving average for new claims, a better measure of labor market trends increased by 2,250 to 343,000. For many economists, a trend reading below the 350,000 level, signals to a firm pace of hiring in March.
US Final GDP
The US Commerce Department announced last week that the Gross Domestic Product expanded at a 0.4 percent annual rate in the last three months of 2012, as better gains in business investment and improved exports of services led the government to push up its previous growth estimate. The growth rate, which was the slowest since the first quarter of 2011 is well below the level that is needed to improve the unemployment rate. Much of the weakness came from a sharp drop in the real federal government consumption expenditures and a drop in the national defense as they decreased 14.8 percent and 22.1 percent respectively as a result of the sequester.
US Chicago PMI Report
The Chicago Purchasing Managers Index reported the Chicago Business Barometer turned downward, falling 4.4 points to 52.4 in March. After a strong start to the year, the business barometer dropped due to sharp declines in new orders and production. New orders fell sharply after three months of solid gains while production was at its slowest pace since September 2009.
Europe
Italian 5-year Bond Auction
The Italian government paid its highest yield since October 2012 to sell a new five-year bond at an auction last week, as worries over the country’s political stalemate weighed on investors’ sentiment. The five-year treasury bills sold EUR 3.91 billion of the new bond maturing June 2018 at a rate of 3.65 percent, up from 3.59 percent it paid on similar paper at a sale last month.
GfK German Consumer Climate
Germany’s consumer sentiment was stable heading into April but developments in the Cyprus financial crisis may damage consumer trust and become a burden on the consumer climate. The consumer sentiment indicator, held stable at 5.9 last month supported by an improvement in economic expectations, although consumers became slightly less willing to spend more and were also a bit more downbeat about their future earnings.
German Unemployment
German unemployment unexpectedly climbed in March, but the jobless rate remained close to a post-reunification low. The number of people out of a job increased by 13,000 to 2.935 million in March although the consensus forecast by economists had been for unemployment to fall by 4,000. The unemployment rate held steady at 6.9 percent, where it has stood since October 2012.
M3 Money Supply
The rate of growth in M3 money supply, which the ECB uses as a gauge of future inflation, fell to 3.1 percent in February from 3.5 percent in January, as the lending to companies and home owners in the Euro Zone contracted for a 10th month in February. The European Central Bank said that while Germany, the region’s largest economy, is showing signs that it is returning to growth, France is stagnating and Italy remains hindered in recession, damping demand for credit in the 17-member currency area.
The Peninsula
