Deeper Analysis
April 2016 in Figures
April 30, 2016
The dominant market themes in March had been strong oil and equities, dollar and yen weakness, and modest sovereign debt yield increases. In April, West Texas Intermediate crude oil extended March’s 13.6% advance with a further leap of 19.8%, but yen strength was the big currency market story. Ten-year sovereign debt yields rose except for […] More
Foreign Exchange Insights and Next Week
Next Week
April 29, 2016
Purchasing managers surveys, holiday closures and U.S. labor statistics will dominate the first week of May. PMIs: A slew of them will be released, covering manufacturing, service sectors, construction and retail trade activity. Multiple reports will be released every day of the week. Central Banks: Monetary policy meetings in Australia, Mexico, the Czech Republic and […] More
Central Bank Watch
Key Russian Central Bank Rate Kept at 11.0%
April 29, 2016
The Central Bank of Russia’s Board of Directors projects a drop of CPI inflation from 7.3% currently to 5% a year from now and the 4.0% target by end-2017. But officials want to be more confident of this path before resuming last year’s easing that saw a series of cuts over the first seven months […] More
New Overnight Developments Abroad - Daily Update
Yen Climbs Further Even as Japanese Golden Week Holidays Begin
April 29, 2016
The yen touched an 18-month high of 106.9 per dollar and is up 0.9% on balance from Thursday’s close. The trade-weighted dollar is close to a one-year low. Japanese markets were closed for Showa Day. Next week’s continuing Golden Week holidays are Constitution Day (May 3), Greenery Day (May 4) and Children’s Day (May 5). […] More
Central Bank Watch
Another Bank of Japan Surprise
April 28, 2016
The BOJ Board did not change any policy settings at this week’s meeting, surprising analysts and investors who almost universally were anticipating the unveiling of new stimulus. Ever since a Japanese discount rate hike on Christmas Day 1989, I’ve learned to expect anything from Japan’s central bank. It is ingrained in the institutional culture there […] More
New Overnight Developments Abroad - Daily Update
Investors Shocked by BOJ’s Decision Not to Ease Policy Further
April 28, 2016
The yen climbed 2.6% against both the dollar and euro, the Japanese Nikkei plunged 3.6%, and the 10-year JGB yield fell 3 basis points to -0.09%. The dollar otherwise fell 1.2% against the kiwi and is down 0.3% relative to the loonie, Swissie, yuan, Aussie dollar and sterling. EUR/USD is flat. In other equity news, […] More
Central Bank Watch
Central Bank of Brazil
April 27, 2016
The Brazilian Selic rate was retained at 14.25%. It’s been at that level since a 50-basis point hike at the end of last July, which culminated 325 basis points of increases since October 2014. The tightening was prompted by a huge inflation overshoot relative to the 4.5% target, fueled by real depreciation. Although inflation has […] More
Central Bank Watch
Reserve Bank of New Zealand: No Changes
April 27, 2016
New Zealand’s Official Cash Rate was left at 2.25%, and a released statement said the kiwi remains overvalued, inflation is low, and that “further policy easing may be required to ensure that future average inflation settles near the middle of the target range.” The OCR was sliced by 25 basis points at the last meeting […] More
Deeper Analysis
An Equivocal FOMC Statement
April 27, 2016
Today’s statement from the Federal Open Market Committee neither shuts out the possibility of an interest rate hike at the June 14-15 meeting nor builds an overwhelming case for acting then unless something vastly unforeseen were to happen. This was a two-handed explanation. On the one hand, committee members are less worried about external risks […] More
Central Bank Watch
FOMC Preview
April 27, 2016
Six weeks have passed since the March16 FOMC statement and ensuing press conference. My review of those events can be seen here. Since the statement’s release, the dollar has fallen 2.0% against the euro and 2.2% relative to the yen. The 10-year Treasury yield is declined ten basis points on balance, while the Dow Jones […] More
