Deeper Analysis
September and the Third Quarter in Figures
September 30, 2011
It’s been a month and quarter for the ages. Investors increasingly priced in a coming U.S. and European recession. All the dire warnings that long-term interest rates will soar because of deficit spending and ensuing inflation could not have been more wrong, yet the thinking behind such predictions continues to control the policy agenda in […] More
Foreign Exchange Insights and Next Week
Next Week
September 30, 2011
Next week begins a new U.S. federal government fiscal year, the final calendar quarter of 2011, and the second half of Japan’s fiscal year. Central banks in Australia, Euroland, the U.K., Japan, Poland and Peru hold policy meetings next week. Germany will be closed Monday for Unity Day, and U.S. Treasury markets will close early […] More
Foreign Exchange Insights and Next Week
A Vicious Circle of Debt Deleveraging and Recession
September 30, 2011
A dangerous storm is brewing, and at its core is reinforcing debt and weak growth that can be found in advanced economies. Just over two years ago, these nations emerged from their worst business downturn since the 1930s. From peak to trough, real GDP fell 9.9% in Japan, almost 7% in Great Britain, and marginally […] More
New Overnight Developments Abroad - Daily Update
Risk Trade Turned Off
September 30, 2011
New concerns have arisen about Greece and the EFSF enlargement scheme. Some believe Greece has only enough cash for the first half of October, and German officials continue to threaten no additional financial support without the imposition of more fiscal austerity in Greece. Germany’s Bundestag, the lower parliamentary body, approved greater EFSF powers by a […] More
Deeper Analysis
Big Picture Reflections on Today’s U.S. Data
September 29, 2011
People who trade currencies daily put a heavy emphasis on how reported data compare to street forecasts, and whether a number is deemed bullish or bearish hinges on that immediate litmus test. Today’s upward revision of second-quarter U.S. GDP growth to 1.3% from 1.0% was a bigger improvement than predicted. New U.S. jobless claims of […] More
Central Bank Watch
Romanian Central Bank Rate Left at 6.25%
September 29, 2011
The National Bank of Romania decided again to retain all monetary policy settings as they were. This has been the approach of other east European central banks during the euro debt crisis, and in Romania’s case, the benchmark 6.25% interest rate has been at that level since a cut of 25 basis points in May […] More
New Overnight Developments Abroad - Daily Update
Quarter-End Distortions
September 29, 2011
Markets can get flooded around quarter-end periods by a rush of data releases and transactions inspired by accounting objectives. Investors continue to watch the unfolding European debt crisis. Germany’s parliament is expected to approve the expanded EFSF facility today, but the vote will be a barometer of the support Chancellor Merkel retains from her own […] More
Deeper Analysis
German Inflation
September 28, 2011
Consumer prices in Germany according to preliminary estimates advanced 0.4% seasonally adjusted in September, and the 12-month inflation rate climbed 0.2 percentage points to 2.6%, a three-year high. Energy was responsible for somewhat over a third of all on-year inflation. Moreover, the momentum of German inflation has been subsiding as attested by an annualized three-month […] More
New Overnight Developments Abroad - Daily Update
Another Speed Bump in Greek Bailout Talks
September 28, 2011
Overnight reports have been confusing on the negotiations over a bailout plan for Greece, specifically over how much debt to write off in a default. The head of the German IFO Institute said Greece needs to leave the euro area as the only feasible way it can recoup competitiveness. The dollar is lower, consistent with […] More
Deeper Analysis
Recessionary Forces at Play in the United States
September 27, 2011
In the see-sawing ride of world share prices, this week has seen impressive and welcome upward movement following last week’s significant downsizing. Optimism that a workable resolution of the European debt crisis has been the catalyst, although the basis for that optimism remains very fragile. The other critical problem for the world economy is the […] More
