Central Bank Watch
Monetary Policy Tightened Again in India
July 27, 2010
The Reserve Bank of India raised interest rates for the second time this month, lifting its key borrowing repo rate by an as-expected 25 basis points to 5.75% but ratcheting its reverse repo rate up by an unexpectedly large 50 basis points to 4.5% in hopes of enticing commercial banks to keep more funds at […] More
New Overnight Developments Abroad - Daily Update
Investors Turn to Risk Trades
July 27, 2010
Lessening risk aversion saw the dollar climb 0.9% against the Swiss franc and 0.7% relative to the yen. The euro advanced to a 5-week high against the Swiss franc of CHF 1.3778. The Chinese yuan again remained steady against the dollar, which otherwise slid by 0.3% against sterling, the Aussie dollar and kiwi and by […] More
Central Bank Watch
Bank of Israel Lifts Key Interest Rate for Second Time in 2010 and Fifth Time Since August 2009
July 26, 2010
Somewhat unexpectedly, Israel’s policy rate was raised by 25 basis points to 1.75%. The prior four increases, all by 25 bps, were implemented in August, November, and December of 2009, as well as March of this year. Like those moves, Today’s statement characterized the most recent increase as part of a normalizing process, but the […] More
New Overnight Developments Abroad - Daily Update
Some Second Thoughts about the European Stress Tests
July 26, 2010
The euro dipped 0.1% against the dollar, which otherwise shows losses of 0.5% against sterling, 0.3% against the yen, Swissy, and kiwi, 0.2% against the Canadian dollar, and 0.1% relative to the Australian dollar. They Chinese yuan was again unchanged against the dollar. Equities in the Pacific Rim rose by 0.9% in South Korea and […] More
Foreign Exchange Insights and Next Week
Next Week
July 24, 2010
Among central banks holding interest rate meetings in the final week of July, those in India and New Zealand seems inclined to tight 25 basis points, while those in Poland and Israel are expected to leave their stances unchanged. As is its custom, Japan will be releasing many key indicators near monthend covering the trade […] More
Foreign Exchange Insights and Next Week
Weak Euro Helping Europe and Hurting the United States
July 23, 2010
In disinflationary or deflationary times, it pays to have a depreciating currency. This lesson was underscored in the Great Depression when Britain went off the gold standard before the United States. The pound fell, and Britain’s economy faired better than America’s. The lines of causation between exchange rate changes and economic fundamentals do not only […] More
Uncategorized
Evidence of Stronger-Than-Assumed European Growth as Investors Await Bank Stress Test Results
July 23, 2010
Germany and Britain reported data with huge upside surprises. Stress tests performed on 91 European banks will begin to get reported today at 16:00 GMT (noon on the U.S. East Coast. Some Spanish banks are expected to fail. Investors are already complaining that the test assumptions were not sufficiently rigorous. Moody’s placed Hungary’s credit rating […] More
Central Bank Watch
Bank of Canada Quarterly Policy Report: Highlights and Inferences
July 22, 2010
After two 25-basis point hikes of the Bank of Canada overnight interest rate target, such stands currently at 0.75%, a level that still represents considerable stimulus. One infers from tables in the new Monetary Policy Report that all remaining stimulus will be removed no later than the end of next year at which the stance […] More
Central Bank Watch
South African Repurchase Rate Kept at 6.5%
July 22, 2010
The unchanged monetary policy setting announced by the South African Reserve Bank was the result expected by a majority of analysts and matched the outcome of the prior policy meeting in May. Inflation risks are considered balanced. Cost-push upward forces from high recent wage awards and elevated administered prices counter-balance downside demand-pull pressures associated with […] More
New Overnight Developments Abroad - Daily Update
Some Robust European Data Sends Stocks Up and Dollar Down
July 22, 2010
The dollar lost 1.3% against the Australian dollar, 1.2% versus the kiwi, 1.0% relative to the Swiss franc, 0.9% against the euro, 0.8% vis-a-vis the Canadian dollar and sterling and 0.3% against the yen. Following Fed Chairman Bernanke’s somber testimony yesterday, stocks were mixed in the Pacific Basin, with looses of 0.9% in Australia, 0.8% […] More
