Archive for December 2010

New Overnight Developments Abroad - Daily Update

Closing the Books on Another Year

December 31, 2010

The dollar is modestly lower in thin yearend trading, with overnight losses of 0.7% against the kiwi, 0.6% relative to the euro, 0.4% against sterling, 0.2% against the yen, yuan and Canadian dollar, and 0.1% versus the Australian dollar.  Emerging market currencies by and large rose against the dollar on this final day of the […] More

Deeper Analysis

Yearend Swing in the Dollar Against Euro and/or Mark

December 30, 2010

The dollar tends to fall against the dominant European currency in the second half of December but then recoup ground in the first half of January.  These tendencies have occurred too frequently to constitute a coincidence. The seasonal pattern manifested itself almost from the very beginning of floating exchange rates in 1973, although that year […] More

Foreign Exchange Insights and Next Week

Next Week

December 30, 2010

No holiday is more widely celebrated around the world than New Year’s Day.  British, Australian and Japanese markets will remain closed on Monday, and New Zealand’s observance will extend all the way to Tuesday.  Italy celebrates the Day of the Epiphany on Thursday.  Central bank decisions will be handed down by Bank Indonesia and the […] More

Central Bank Watch

Taiwan’s Monetary Policy Tightened Further

December 30, 2010

The Central Bank of the Republic of China implemented a third set of interest rate increases, each amounting to 12.5 basis points.  The prior two increases were announced June 8 and September 30th.  The new discount rate is 1.625% versus a cyclical low of 1.25% prior to June.  The collateralized lending rate is now 2.0%, […] More

New Overnight Developments Abroad - Daily Update

Swissy Ending a Strong Year on a Strong Note

December 30, 2010

Most markets will be shut tomorrow in observance of the new year. The dollar lost another 0.7% against the Swiss franc and set a new record high of CHF 0.9372.  The franc is 19.1% stronger than its end-2009 level against the euro. The Chinese yuan advanced 0.3% against the dollar, bringing its cumulative appreciation in […] More

Deeper Analysis

Japan’s Economy in a Pause But Hopeful at the Turn of the Year

December 29, 2010

The government and Bank of Japan December economic assessments depicted a continuing pause, with weakening exports hitting industrial production and business sentiment turning more cautious.  Mild deflation continues as well. Among data releases late in December were the following highlights: The November jobless rate of 5.1% was a tenth higher than its level in the […] More

Central Bank Watch

Unchanged Monetary Policy in the Philippines

December 29, 2010

Bangko Sentral Ng Pilipinas retained its key 6.0% overnight lending and 4.0% overnight borrowing rates.  When the economy was contracting those rates were cut six times by a total of 200 basis points between December 2008 and July 2009, but no changes have occurred subsequently unlike the case at many other Asian central banks.  A […] More

New Overnight Developments Abroad - Daily Update

Dollar and Sterling Lower

December 29, 2010

As end-2010 approaches, the dollar fell overnight by another 0.9% against the yen, 0.6% against the kiwi, 0.4% versus the Australian dollar and 0.1% relative to the Canadian dollar.  There was no further change against the Swiss franc or euro and a gain of 0.8% relative to sterling.  Over the past week since December 22, […] More

Central Bank Watch

No Change in Key Israeli Interest Rate

December 28, 2010

The Bank of Israel’s key interest rate was left at 2.0%, matching expectations.  There so far have been six increases of 25 basis points each but none since September.  In a released statement, monetary policy was called “expansionary” and in a gradual return to more normal levels, but several reasons were given for not raising the […] More

New Overnight Developments Abroad - Daily Update

Chinese Rate Hike on Christmas Day

December 27, 2010

The People’s Bank of China implemented a second rate increase, lifting its key lending rate to 5.81% from 5.56% and 5.31% at the beginning of 4Q10.  The central bank deposit rate is now 2.75%, up from 2.5% and a cyclical low of 2.25%.  The action was announced on Christmas Day,a day when almost all market […] More

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