Foreign Exchange Insights and Next Week
Will the Euro Lose Significant Strength?
April 3, 2014
Purchasing power parity theory postulates that in the long run currencies associated with relatively high inflation like the United States during much of the 1970s tend to depreciate. Put differently, the external and internal values of money move directionally in tandem. One would correspondingly think that negative inflation, or deflation, might be associated with rising […] More
Deeper Analysis
U.S. Regains Service-Sector PMI Advantage over Ezone as Well
April 3, 2014
Data released on Tuesday showed the reemergence of a higher U.S. manufacturing purchasing managers index than found in the euro area, and investors learned today that the same pattern occurred in services. Improvement in the U.S. non-manufacturing PMI of 1.5 paints to 53.1 reflects better weather and did not fully offset the deterioration between January […] More
Central Bank Watch
Central Bank of Brazil Engineers Another Rate Hike
April 3, 2014
The announcement came last Wednesday that the Central Bank of Brazil’s Selic rate is being raised to 11.0% from 10.75%. There have been three hikes of 25 basis points and six of 50 bps over the past year from a record low of 7.25% prior to April 2013. The striking thing about the latest move […] More
Central Bank Watch
ECB Presents Greater Willingness to Ease by all Mandate-Allowable Means Should that Become Necessary
April 3, 2014
There was not rate cut or additional unconventional stimulus unveiled after this month’s Governing Council policy meeting. But tougher language was used in a released statement and at President Draghi’s press conference to convey that Council officials are taking this prolonged period of low inflation more seriously and are unanimously prepared to implement extra conventional […] More
New Overnight Developments Abroad - Daily Update
PMIs and an ECB Press Conference
April 3, 2014
Prior to the ECB announcement, the dollar was narrowly up by 0.3% against the kiwi, 0.2% versus sterling and 0.1% relative to the euro, yen, Aussie dollar and Chinese yuan. The Swiss franc is steady, and the loonie has firmed 0.2% against its U.S. counterpart. China’s government unveiled some tax cuts and other steps to […] More
