Archive for April 2010

Foreign Exchange Insights and Next Week

European Fiscal Problems Won’t Fade

April 30, 2010

Currency market trading next week will be dominated by the scramble to rescue Greece.  Outside aid for that heavily indebted economy has been misplayed repeatedly by just about everyone involved in negotiations, and the euro has paid a price for that indecision.  Investors cannot avoid comparing attempts to rescue Greece from sudden default to the […] More

Central Bank Watch

Bank of Japan Review

April 30, 2010

The Bank of Japan kept its uncollateralized overnight call rate target at 0.1%, the level since December 2008, and released a new Outlook for Economic Activity and Prices.  Projected real GDP growth in the current fiscal year (April 1 – March 31) was revised upward by a half percentage point to +1.8%, while the growth […] More

New Overnight Developments Abroad - Daily Update

Data Deluge on Last Day of Month and Week

April 30, 2010

The dollar eased mostly on month-end flows but also hopes that a Greek aid package will be fashioned soon.  The greenback lost 0.6% against the euro, Swissy and kiwi and 0.3% against the Canadian dollar.  It is unchanged against sterling, however, and up 0.5% versus the yen.  U.S. 1Q10 GDP data arrive later today. Asian […] More

Central Bank Watch

Hong Kong Monetary Authority Retains Base Rate Level of 0.5%

April 29, 2010

Monetary policy in Hong is subordinated to enforcing a fixed HKD/USD peg via a currency board system wherein Hong Kong’s monetary base is fully backed by U.S. dollars.  The Hong Kong Monetary Authority always takes its cue from actions of the FOMC regarding the federal funds target.  When the latter changes, the HKMA generally announces […] More

New Overnight Developments Abroad - Daily Update

Slightly Softer Dollar and Yen

April 29, 2010

The dollar and yen declined 0.4% against the Canadian dollar, 0.2% against the kiwi, Aussie dollar, euro and sterling and by 0.1% relative to the Swiss franc. Japanese markets were shut for the first holiday of “Golden Week,” Day of the Showa.  They will be open Friday but closed next Monday through Wednesday. Asian equities […] More

Central Bank Watch

New Zealand Official Cash Rate Kept at 2.5%

April 28, 2010

New Zealand’s official cash rate (OCR) has been at 2.5% for a full year since a 50-basis point cut in April 2009.  The decision to leave the OCR at 2.5% met expectations, but the statement from monetary officials was less hawkish than after the prior meeting in several respects. Less was said about private domestic […] More

Central Bank Watch

Brazilian Selic Rate Lifted for First Time Since September 2008

April 28, 2010

COPOM, the monetary policy committee at the Central Bank of Brazil, raised its key Selic interest rate from a record low of 8.75% to 9.5%.  Analysts were unanimous in projecting an increase but split over whether the advance would be by 50, 75, or 100 basis points. Brazilian CPI inflation has accelerated from 4.3% at […] More

Larry's Blog

Germany’s Peculiar Role in the Present Euro Fiscal Crisis

April 28, 2010

The Greek debt problems is exacting disproportionate damage to the common currency’s reputation by demonstrating a lack of political cohesion to tackle a problem like this, by confirming that a single monetary policy cannot coexist with sixteen fiscal policies, by generating fears that a Greek default is a matter of when, not if, and by […] More

Central Bank Watch

Market Levels When the FOMC Has Met Before

April 28, 2010

The high state of alert among investors over Greece’s fiscal problems and the risks of contagion to other markets seemingly will prevent the Fed from modifying language predicting “exceptionally low levels of the federal funds rate for an extended period of time.”  A further upgrade of the assessment of economic conditions seems likely but continues […] More

Central Bank Watch

Polish Central Bank Interest Rates Left Unchanged Again as Expected

April 28, 2010

The key seven-day reference interest rate of the Narodowy Bank has been at 3.5% since a 25 basis point reduction in June 2009.  That was the sixth cut since November 2008 and brought the cumulative magnitude of ease to 250 bps from a cyclical peak of 6.0%.  Analysts anticipate the onset of rate increases to […] More

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