Archive for July 2014

Deeper Analysis

July in Figures

July 31, 2014

Like an Olympic bicycle racing event, most of the financial market action in July happened at the end of the race.  For the month as a whole, the dollar mostly rose, while share prices, commodities and bond yields mostly fell.  None of the dollar’s year-to-date movements exceeded +/- 4.0%. 10-Yr Yield 07/02/14 Chg vs End-2Q […] More

Central Bank Watch

Czech National Bank Monetary Policy to Remain Accommodative

July 31, 2014

Extreme disinflation in the euro area forced Czech monetary policy to become progressively more accommodative during and since the Great Recession.  From a high of 3.75% prior to a first cut in August 2008, the two-week Czech repo rate was cut eight times to 0.75% by June 2010 and three more times between June 2012 […] More

Central Bank Watch

Central Bank Interest Rate Hike in the Philippines

July 31, 2014

The Filipino key borrowing and lending rates were increased today by 25 basis points each to 3.75% and 5.75%.  Opinion ahead of the Monetary Board meeting and Bangko Sentral ng Pilipinas had been mixed between those anticipating the tightening and those looking for no change.  The move was described in a released statement as “preemptive” […] More

New Overnight Developments Abroad - Daily Update

Whole Lot of Data Getting Released

July 31, 2014

The deluge of monthend data releases continued on Thursday, but the dollar hasn’t reacted much, with no net change against the yen, yuan and kiwi, upticks of 0.1% versus the euro, Swissie and loonie, and gains of 0.2% relative to sterling and 0.4% vis-a-vis the Australian dollar. Share prices are mostly lower, but a 1.2% […] More

Foreign Exchange Insights and Next Week

What’s "Normal" in the U.S. Economy, and Does Returning to Such Matter for the Dollar?

July 30, 2014

Today’s U.S. GDP data were considerably stronger than forecast and corroborate hopes that a sustained better performance is at hand.  Real GDP has expanded at a 3.5% or better annualized rate in three of the past four quarters., and personal consumption grew at least 2.0% in those three quarters.  On the other hand, year-over-year growth […] More

Central Bank Watch

FOMC Statement Makes No Radical Shifts and Draws a Dissenting Vote

July 30, 2014

The latest Federal Open Market Committee statement  No longer calls the jobless rate “elevated” but asserts that other measures indicate “significant underutilizatrion of labor resources.” Notes that “inflation has moved somewhat closer to the Committee’s longer-run objective.” Also “judges that the likelihood of inflation running persistently below 2% has diminished somewhat.” Cuts monthly asset buying […] More

Central Bank Watch

FOMC Preview

July 30, 2014

A new policy statement will be released by the Federal Open Market Committee will be released at 14:00 EDT (18:00 GMT).  The prior statement spoke about a post-1Q rebound of the economy, and this communique is likely to upgrade that trend further.  Of particular note will be how the statement incorporates the changed nuance introduced […] More

New Overnight Developments Abroad - Daily Update

Wednesday Hinges on Three U.S. Releases

July 30, 2014

U.S. GDP is not expected to do more than reverse the first-quarter contraction, which would leave first-half growth flat.  Annual data revision introduce extra uncertainty. The ADP estimate of private U.S. jobs growth in July will affect expectations of this Friday’s Labor Department monthly jobs report. At 18:00 GMT, the FOMC will release of the […] More

New Overnight Developments Abroad - Daily Update

Weak Japanese Data and a New Low in German 10-Year Bund Yield

July 29, 2014

Although unchanged on balance, the bund touched 1.119% overnight, which was even below the prior record low of 1.127% in June 2012. Japanese real household spending and retail sales posted third on-year declines in a row, while jobless rate rose to a five-month high. On the geopolitical tension front, Israel intensified its offensive against Gaza, […] More

Deeper Analysis

A Quarter Century Old Disinflation

July 28, 2014

The fear of too much inflation still strikes a more sensitive nerve than the fear of too little inflation.  The basic complaint against the ultra-accommodative monetary policies around the world is that this is a recipe for high inflation in the future.  The writing on the walls, a climb in expected inflation, is predicted to […] More

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