Archive for June 2012

Foreign Exchange Insights and Next Week

A Watershed — or Perhaps Not

June 29, 2012

The paramount matter for currency market participants is whether Europe has turned a corner in resolving its sovereign debt and banking crisis.  Only a cockeyed optimist would deny that more setbacks lie ahead, but can it be at least concluded that an inflection point in the crisis has been crossed?  The answer requires a leap […] More

Deeper Analysis

Japanese Data Roundup

June 29, 2012

A considerable number of Japanese economic statistics are released near the end of every month, including consumer prices, industrial production, retail sales, unemployment, real household spending, housing starts, construction orders, auto production, and the purchasing managers survey of manufacturers.  June’s report of May-June data was a mixed bag that on balance doesn’t alter the view […] More

New Overnight Developments Abroad - Daily Update

Newfound Hope from the Brussels EU Summit

June 29, 2012

Markets responded positively to verbal progress on a number of fronts such as an EU growth pact of EUR 120 billion, ECB involvement in EU bank supervision, and better terms for recapitalizing Spanish banks.  We’ve seen this before, that is a pretense of greater cohesion at a big meeting, followed by a market rally, followed […] More

Deeper Analysis

Today’s North American Economic Data

June 28, 2012

The 1.9% annualized increased of U.S. real GDP in the first quarter was unrevised from the prior estimate.  Personal consumption growth of 2.5% accounted for 93% of GDP’s rise during the quarter.  Private investment, net foreign demand, and inventories supported growth modestly but were collectively neutralized by a 4.0% annualized drop in public-sector spending that […] More

Central Bank Watch

First Czech Rate Cut in 25 Months

June 28, 2012

By a narrow 4-3 split vote, the Policy Board of the Czech National Bank voted to cut the two-week repo rate to 0.50% from 0.75% and the Czech Lombard Rate to 1.50% from 1.75%.  The decision was expected.  A released statement expects consumer price inflation to remain above the 1-3% target range until next year […] More

New Overnight Developments Abroad - Daily Update

Summit Time and the Living Ain’t Easy

June 28, 2012

Another summit of EU leaders has begun in Brussels amid dampened market expectations that anything very constructive will emerge to end the debt and banking crisis.  German officials remain adamant in resisting new initiatives.  Speculation continues that the ECB will cut interest rates next week.  Just in is an announcement from the Czech monetary authorities […] More

Larry's Blog

Germany Losing the High Moral Ground

June 27, 2012

The nearly three-year-old euro debt and banking crisis is a regional crisis within a global financial crisis that first broke out two years earlier.  The stresses of the Great Recession exposed shortcomings in the European Economic and Monetary Union that must be fixed if the arrangement is to persevere.  Until recently, Germany occupied the moral […] More

Central Bank Watch

National Bank of Romania Opts for a Prudent Stance

June 27, 2012

Officials left Romania’s monetary policy rate at 5.25% despite a record low on-year CPI inflation rate of 1.79% in May.  Inflation fell by 0.6 percentage points from April and by 1.35 percentage points from the on-year pace last December.  The monetary policy rate is now 3.5 percentage points higher than inflation, giving Romania one of […] More

New Overnight Developments Abroad - Daily Update

Steady Dollar

June 27, 2012

The dollar is unchanged from Tuesday’s closing levels against the euro and Swiss franc, up 0.1% relative to the yen, loonie and sterling, and 0.1% lower versus the yuan and Australian and New Zealand dollars. The 10-year German bund is five basis points higher after Egan-Jones downgraded German credit to a rating of A+ from […] More

Central Bank Watch

Hungarian Monetary Policy Pause Extended for Another Month

June 26, 2012

The Magyar Nemzeti Bank Base Rate was last changed in December, when a fifth increase was implemented.  The rate level is now 7.0% versus above-target on-year CPI inflation of 5.3%.  Inflation has been lifted by tax hikes made to reduce the budget deficit.  Hungary also happens to be in recession.  Real GDP plunged 5.1% at […] More

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