New Overnight Developments Abroad - Daily Update

Lessening Risk Perceived of a Fed Rate Hike in 2016

July 28, 2016

The FOMC statement was more ambivalent than many analysts had expected, even though labor market conditions were upgraded overall downside growth risks were said to have diminished.  The dollar in response shows overnight losses of 0.7% against the yen and Swiss franc, 0.5% against the Australian dollar and euro, 0.3% versus the kiwi, and 0.2% […] Read Article

Foreign Exchange Insights and Next Week

Mid-Summer Musing

July 26, 2016

A week from Thursday will mark the midpoint between the summer solstice and autumnal equinox.  In theory, August is a sleepy month when investors and traders take their holidays.  Historically, however, August has been hardly insulated from market volatility or the event risks.  For example, both world wars began in late summer, and Iraq’s 1990 […] Read Article

Central Bank Watch

FOMC Statement

July 27, 2016

The Federal Open Market Committee left the federal funds rate target unchanged as expected at 0.25-0.50% and released a statement that upgraded labor market conditions but otherwise pretty much retained the same economic assessment.  Unlike the previous mid-June result, the decision to leave policy unchanged was not unanimous.  As she had done at meetings in […] Read Article

Deeper Analysis

Currency Determination at the Intersection of Economics and Politics

July 14, 2016

Contrary to popular opinion, politics and economics do not operate in separate universes.  Politics is the business governing who gets to make the rules for all other business activity and how the laws will be enforced and interpreted.  Politics determines policy, and abrupt changes in policy and policy communication influence economic performance profoundly.  That’s why […] Read Article

Central Bank Watch

FOMC Not Expected to Change Interest Rate Today

July 27, 2016

No press conference is scheduled to follow today’s released FOMC policy statement due at 18:00 GMT (14:00 EDT), nor are policymakers likely to spring a surprise federal funds rate hike on the market.  If that were to happen, an unscheduled press conference would be hastily arranged.  The previous FOMC statement on June 14 occurred just […] More

New Overnight Developments Abroad - Daily Update

Sentiment Up Ahead of FOMC on Japanese Fiscal Indication and Apple’s 2Q Earnings

July 27, 2016

The FOMC will release a policy statement at 14:00 EDT (18:00 GMT).  No rate hike is expected. Japanese Prime Minister Abe quantified the coming fiscal stimulus at a greater-than-expected JPY 28 trillion, or roughly $265 billion.  However, it seems that only about half the total will involve “real money,” that is actual government deficit spending. […] More

Central Bank Watch

No Change Made to Hungary’s Central Bank Base Rate

July 26, 2016

Officials at Magyar Nemzeti Bank have used the opportunity of persistent, extensive unused capacity and a lack of pricing pressure to loosen monetary progressively.  Their main interest rate was reduced 490 basis points to 2.1% during the two years ending July 2014.  Five additional 15-basis point cuts were done last year at successive meetings from March through […] More

New Overnight Developments Abroad - Daily Update

Yen, Aussie Dollar and Kiwi Strengthen

July 26, 2016

The dollar fell overnight by 1.0% against the yen, 0.8% relative to the kiwi and 0.7% vis-a-vis the Aussie dollar, but the U.S. currency is little changed against other major currencies. The Japanese Nikkei lost 1.4% on signs from Finance Minister Aso that less fiscal stimulus is planned than investors were assuming.  The Bank of […] More

Central Bank Watch

Bank of Israel Keeps Key Interest Rate at 0.10%

July 25, 2016

Almost a year and a half have elapsed since the last Israeli interest rate change, which was a 15-basis point cut in February 2015.  The previous four calendar years had seen the rate reduced from 3.25% to 0.25%.  A statement released by Bank of Israel policymakers after this month’s review defended the appropriateness of the […] More

New Overnight Developments Abroad - Daily Update

Steady Dollar

July 25, 2016

Group of Twenty finance ministers and central bankers, who met over the weekend in Chengdu, China, released a communique that broke no new ground in currency policy: We reiterate that excess volatility and disorderly movements in exchange rates can have adverse implications for economic and financial stability. We will consult closely on exchange markets. We […] More

Foreign Exchange Insights and Next Week

Next Week

July 22, 2016

Special Events:  Meeting of G20 central bank leaders and finance ministers on July 23-24.  U.S. Democratic Party National Convention on Monday-Thursday. Central Banks:  Monetary policy meetings in the U.S., Japan, Russia, Ukraine, Hungary, Israel and The Philippines. Reserve Bank of New Zealand Governor Wheeler and Bank of Japan Governor Kuroda speak publicly.  No press conference […] More

New Overnight Developments Abroad - Daily Update

Markets React to U.K. July PMI Figures but Hardly to Trump’s Speech

July 22, 2016

Britain’s composite purchasing managers index swung from 52.4 in June to an 87-month low of 47.7 in July.  Service sector activity (49.1) contracted at the fastest pace in 41 months, while services did even worse, falling at the most rapid rate in 88 months with a reading of 47.4.  Sterling’s post-Brexit slump sent input prices […] More

Central Bank Watch

South African Reserve Bank: No Change in Policy Interest Rate

July 21, 2016

Like the ECB Governing Council and Bank Indonesia’s Board of Governors, each of which also held policy meetings today, South Africa’s Monetary Policy Committee chose not to initiate a change at this time.  Whereas the other two central banks might arguably eased, the risk in the case of South Africa was on the upside.  According […] More

Central Bank Watch

ECB Keeps Things the Same

July 21, 2016

Concluding that the immediate disruption to eurozone financial markets from the British Brexit referendum had been short-lived in part because of policy supports to make the banking system more resilient, the ECB Governing Council left interest rates and non-standard policy instruments unchanged and released a statement explaining the latest thinking on the economic outlook. Officials […] More

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