New Overnight Developments Abroad - Daily Update

Lots of Data and Another Drop in China’s Stockmarket

July 30, 2015

The dollar rose overnight by 1.0% against the kiwi, 0.4% versus the yen, Swissie and Australian dollar, and 0.2% relative to the loonie, euro and sterling.  The yuan continues to be held steady, but Chinese stocks slumped 2-3%. in other Pacific Basin markets, equities dropped 1.1% in Singapore, 0.9% in South Korea and 0.6% in […] Read Article

Foreign Exchange Insights and Next Week

The Dollar, Fed Policy and Falling Equities and Commodities

July 27, 2015

One possible explanation for the stalled dollar advance was offered in last week’s Foreign Exchange Insights essay, namely contrasting current account positions in the United States on the one hand and the eurozone and Japan on the other.  This week scopes out three other factors that may limit the U.S. currency’s strength. The first factor […] Read Article

Central Bank Watch

Central Bank of Brazil Tightens Monetary Policy Again in Face of Accelerating Inflation and Contracting GDP

July 29, 2015

Copom, Brazil’s monetary policy committee, started raising its short-term Selic interest rate from a base of 7.25% in April 2013.  Inflation then of 6.6% was above target and threatening to send inflation expectations upward.  Over the ensuing year to April 2014, the Selic rate was increased by 3.75% to 11%, and policy tightening was put […] Read Article

Deeper Analysis

FOMC Policy Statement a Very Close Facsimile of the Prior One

July 29, 2015

Officials made even fewer modifications in the wording than the scant amount I was expecting, and the only changes came in the first paragraph describing economic conditions.  The labor market — both job growth and unemployment — were upgraded, but the overall assessment of moderately expanding activity, sub-target inflation, low market-based measures of inflation compensation, […] Read Article

Central Bank Watch

FOMC Preview

July 29, 2015

The last FOMC meeting on June 16-17 upgraded growth on improved household consumption, spoke of continuing progress on the mandates to maximize employment and secure a 2.0% inflation target, but decided that more evidence of sustained growth and higher inflation are needed before beginning to normalize the federal funds rate.  Energy and the dollar, two […] More

New Overnight Developments Abroad - Daily Update

Dollar Marking Time Ahead of Today’s FOMC Announcement

July 29, 2015

The FOMC policy statement will be released at 18:00 GMT (14:00 EDT).  There is no press conference or release of updated forecasts.  No policy change is expected, but investors are unsure if the statement will provide clarifying information regarding the likelihood of a rate hike at September’s meeting.  I look for vagueness on that regard, […] More

New Overnight Developments Abroad - Daily Update

Weaker Euro and Yen but Mixed Movements in Share Prices Overnight

July 28, 2015

China’s Shanghai Composite index dropped another 1.7%, and share prices elsewhere in the Pacific Rim lost 1.2% in Indonesia, 1.0% in Singapore, 0.4% in India and New Zealand, 0.3% in Taiwan and 0.1% in Japan.  In Europe, however, stocks have recovered 1.8% in Italy, 1.5% in Germany, 1.4% in France and 0.7% in Switzerland.  The […] More

Central Bank Watch

Bank of Israel

July 27, 2015

The key central bank interest rate was left at 0.10%, its level since a cut of 15 basis points in February.  There were three reductions of 25 basis points each in 2014, the latest of which occurred in August.  75 basis points each were cut in 2011, 2012, 2013 from an end-2010 level of 3.25%.  […] More

New Overnight Developments Abroad - Daily Update

A Collapse in Chinese Equities

July 27, 2015

An 8.5% drop in the Chinese Shanghai Composite Index was the biggest daily decline since February 2007 and depressed investor sentiment in other markets, where stocks fell 4.0% in Hong Kong, 2.4% in Taiwan, 2.0% in India, 1.8% in Indonesia 1.2% in Singapore and 1.0% in Japan.  In European trading, equities are down already by […] More

Foreign Exchange Insights and Next Week

Next Week

July 24, 2015

Central Banking Front:  Five central banks hold monetary policy reviews: Brazil, Russia, Israel, Mexico, and the Federal Reserve.  No press conference is scheduled after the FOMC statement, and markets do not anticipate a policy change.  The monthly ECB Bulletin will be published, and Governor Stevens of the Reserve Bank of Australia speaks publicly. Scheduled U.S. […] More

New Overnight Developments Abroad - Daily Update

Thank God It’s Friday as Risk-Off Mood Persists

July 24, 2015

Share prices in the Pacific Rim fell 1.8% in China, 1.2% in Hong Kong, 0.9% in South Korea, India and Indonesia and 0.6% in Japan. Comex gold dropped another 0.8% to $1,082.00.  West Texas Intermediate oil stayed below $50 but recovered 0.5% to $48.69 per barrel. Ten-year sovereign debt yields declined another five basis points […] More

Central Bank Watch

South African Reserve Bank Repo Rate Raised for First Time in a Year

July 23, 2015

A 25-basis point increase in SARB’s repo rate to 6.0% was the first change since two increases in 2014 of 50 basis points in January followed by 25 bps in July.  South Africa is struggling with both low growth and rising inflationary pressure.  Although total inflation is currently below target, a released statement projects a […] More

Central Bank Watch

Central Bank of the Republic of Turkey

July 23, 2015

Turkey’s Monetary Policy Committee again “decided to keep the interest rates at current levels.”  Since being cut in February, the one-week repo rate has been at 7.5% and the overnight lending and borrowing rates have stood respectively at 10.75% and 7.25%.  Previous peaks, reached after sharp hikes in January 2014 had been at 10.0%, 12.0% […] More

Central Bank Watch

Reserve Bank of New Zealand in Easing State of Mind

July 23, 2015

Monetary officials at the RBNZ are pushing for easier monetary conditions through a combination of lower interest rates and additional New Zealand dollar depreciation.  A statement from Governor Wheeler after the second straight policy meeting to cut the Official Cash Rate (OCR) proclaimed that the economic outlook now looks somewhat softer than imagined at the […] More

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