New Overnight Developments Abroad - Daily Update

Investors Shocked by BOJ’s Decision Not to Ease Policy Further

April 28, 2016

The yen climbed 2.6% against both the dollar and euro, the Japanese Nikkei plunged 3.6%, and the 10-year JGB yield fell 3 basis points to -0.09%. The dollar otherwise fell 1.2% against the kiwi and is down 0.3% relative to the loonie, Swissie, yuan, Aussie dollar and sterling.  EUR/USD is flat. In other equity news, […] Read Article

Foreign Exchange Insights and Next Week

Next Week

April 22, 2016

Central Banking:  Interest rate policy meetings are scheduled in the U.S., Japan, Russia, Brazil, New Zealand and Hungary.  Governor Poloz of the Bank of Canada and President Jordan of the Swiss National Bank speak publicly. Holiday Closures:  Monday in Australia for Anzac Day and Friday in Japan for Showa Day, the of four Golden Week […] Read Article

Central Bank Watch

Another Bank of Japan Surprise

April 28, 2016

The BOJ Board did not change any policy settings at this week’s meeting, surprising analysts and investors who almost universally were anticipating the unveiling of new stimulus.  Ever since a Japanese discount rate hike on Christmas Day 1989, I’ve learned to expect anything from Japan’s central bank.  It is ingrained in the institutional culture there […] Read Article

Deeper Analysis

An Equivocal FOMC Statement

April 27, 2016

Today’s statement from the Federal Open Market Committee neither shuts out the possibility of an interest rate hike at the June 14-15 meeting nor builds an overwhelming case for acting then unless something vastly unforeseen were to happen.  This was a two-handed explanation. On the one hand, committee members are less worried about external risks […] Read Article

Central Bank Watch

Central Bank of Brazil

April 27, 2016

The Brazilian Selic rate was retained at 14.25%.  It’s been at that level since a 50-basis point hike at the end of last July, which culminated 325 basis points of increases since October 2014.  The tightening was prompted by a huge inflation overshoot relative to the 4.5% target, fueled by real depreciation.  Although inflation has […] More

Central Bank Watch

Reserve Bank of New Zealand: No Changes

April 27, 2016

New Zealand’s Official Cash Rate was left at 2.25%, and a released statement said the kiwi remains overvalued, inflation is low, and that “further policy easing may be required to ensure that future average inflation settles near the middle of the target range.”  The OCR was sliced by 25 basis points at the last meeting […] More

Central Bank Watch

FOMC Preview

April 27, 2016

Six weeks have passed since the March16 FOMC statement and ensuing press conference.  My review of those events can be seen here.  Since the statement’s release, the dollar has fallen 2.0% against the euro and 2.2% relative to the yen.  The 10-year Treasury yield is declined ten basis points on balance, while the Dow Jones […] More

New Overnight Developments Abroad - Daily Update

FOMC Day and an Australian Data Surprise

April 27, 2016

The Federal Open Market Committee will release a statement at 14:00 EDT (18:00 GMT) on the results of its third policy meeting of 2016.  The federal funds rate is not expected to change, and attention will be focused on comments regarding U.S. economic conditions and likely prospects for clues to the timing of the next […] More

Central Bank Watch

Another 15-Basis Point Central Bank Rate Cut in Hungary

April 26, 2016

Magyar Nemzeti Bank cut its base rate to 1.05% from 1.20%.  The rate had been frozen at 1.35% from July 2015 until last month’s meeting when a similar-sized rate cut was implemented in conjunction with a significant downwardly revised inflation projection.  A statement released today concludes that “the sustainable achievement of the inflation target points […] More

New Overnight Developments Abroad - Daily Update

Chernobyl Anniversary, Five U.S. Primaries, and Firmer Oil Price

April 26, 2016

Today is the 30th anniversary of the nuclear reactor accident in Chernobyl.  That event still constrains use of nuclear power even as the planet continues to warm. Today’s U.S. presidential primaries are in Pennsylvania, Maryland, Connecticut, Delaware, and Rhode Island.  384 Democratic Party delegates and 118 Republican delegates are at stake.  Trump is expected to […] More

New Overnight Developments Abroad - Daily Update

A Commodities Cloud Over World Financial Markets

April 25, 2016

The prices of crude oil (WTI down 1.3% to $43.16) and many industrial metals have fallen at the start of the new week, leading to a risk averse mood.  Gold is steady at $1,233.15 per ounce. Equities in Asia lost 0.8% in Japan, 0.4% in China, 1.2% in Hong Kong, 1.4% in Singapore, 0.7% in […] More

New Overnight Developments Abroad - Daily Update

A Weak Yen and Lackluster PMI Reports

April 22, 2016

The yen has declined 1.0% on balance against the dollar on unconfirmed reports that the Bank of Japan will announce fresh stimulus next week including the expansion of sub-zero interest rates to its lending to banks. Against other currencies, the dollar lost 0.5% against sterling and by 0.2% relative to the loonie and Aussie dollar.  […] More

Central Bank Watch

ECB Governing Council Statement and Press Conference

April 21, 2016

Fresh action had not been expected at the April policy meeting following the plethora of actions unveiled at the March 10 meeting.  As predicted, the refinancing, deposit and marginal lending rates were kept at zero, -0.40% and +025%, and the emphasis of today’s message was on full implementation of steps announced in March.  The statement […] More

Central Bank Watch

Swedish Riksbank Executive Board Extends Quantitative Easing

April 21, 2016

Sweden’s negative repo rate was left at -0.50%.  It took seven spaced reductions between December 2011 and October 2014 to cut the policy rate from 2.0% to zero.  Negative rate policy was introduced in February 2015 initially at -0.10%, then lowered by 15 basis points in March 2015, 10 bps in July 2015, and 15 […] More

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