Deeper Analysis
Balancing the Twin Fed Policy Mandates
July 21, 2010
The Federal Reserve is a creation of Congress and mandated by that legislative branch to promote two objectives: price stability and maximizing employment. Because of this accountability to Congress, the Fed Chairman is required to testify before the banking committees of the Senate and House twice a year. These appearances typically occur in February and [...] More
New Overnight Developments Abroad - Daily Update
Wednesday Spotlight on Central Banks
July 21, 2010
The euro fell 0.7% against the dollar, 0.5% against sterling, and over 1% against the yen. Concern about Friday’s stress test results, which have been discredited already in the eyes of many investors, continues to rattle the European common currency even as European stocks advance. Commodity sensitive currencies are firmer. The loonie, kiwi, and Aussie [...] More
Central Bank Watch
Preview of Humphrey-Hawkins Testimony
July 20, 2010
On Wednesday and Thursday, Fed Chairman Ben Bernanke briefs both houses of Congress on U.S. economic conditions and prospects for monetary policy. This semi-annual ritual, formerly known as the Humphrey-Hawkins hearings, always has market-moving potential. One year ago in July 2009, Bernanke spoke about tentative signs of stabilization in the economy amid continuing dangers. A [...] More
Central Bank Watch
Bank of Canada Raises Interest Rate But Changes Light to Amber from Green
July 20, 2010
In follow-up to a first 25-basis point rate increase on June 1, Canada’s overnight rate target was lifted by another 25 basis points to 0.75%. The move was widely forecast, and analysts were most interested in any clues about future policy. In several ways, today’s new Bank of Canada statement backpedals, suggesting a third rate [...] More
New Overnight Developments Abroad - Daily Update
Market Worried About Euroland
July 20, 2010
Ahead of Friday’s publication of European bank stress test results, the German Dax, Paris Cac, Spanish IBEX, and British Ftse have traded 1.1%, 1.2%, 0.7%, and 0.6% lower. In the Pacific Rim, the Japanese Nikkei reopened after Monday’s Marine Day holiday with a loss of 1.2% to 9,300. Stocks fell 0.7% in Thailand and 0.3% [...] More
Central Bank Watch
Bank of Canada Interest Rate Preview
July 19, 2010
The fifth out of eight scheduled interest rate decisions in 2010 will be unveiled at 13:00 GMT Tuesday. Analysts will be combing tomorrow’s statement for clues to whether more tightening is coming in the near term. There’s little doubt that tomorrow will see a second increase to 0.75%, which will put the Bank of Canada [...] More
Central Bank Watch
Hungary’s Monetary Policy Bias Pivots
July 19, 2010
Magyar Nemzeti Bank officials left their key interest rate at 5.25% as they had done at their June and May meetings and as analysts were expected. But for the first time, an explicit possibility of a rate hike is mentioned; the second to last sentence of a statement released today reads, “A sustained increase in [...] More
New Overnight Developments Abroad - Daily Update
Japanese Officials Concerned About Yen’s Strength
July 19, 2010
The dollar recovered 0.4% against the yen amid rumors BOJ might ease if yen stays near 85 per dollar level. The dollar also gained 0.7% against the kiwi, 0.2% versus the loonie, and 0.1% relative to the Swiss franc, Aussie dollar, Chinese yuan and sterling. The greenback slipped 0.3% against the euro. The Hungarian forint [...] More
Central Bank Watch
Mexico and Chile Monetary Policy Reviews
July 17, 2010
The Mexican overnight interbank funding rate, 4.5% since July 2009, was left unchanged as expected on Friday. The rate was reduced in total by 375 basis points last year. The Mexican economy is recovering, but on-year first-quarter growth of 4.3% was just half as much as in Brazil and five-eighths as much as in Argentina. [...] More
Foreign Exchange Insights and Next Week
Next Week
July 16, 2010
On the central bank-watching beat, the coming week features Fed Chairman Bernanke’s Humphrey-Hawkins testimony, likely central bank rate hikes in Canada, and Brazil, other central bank policy meetings in India, South Africa, Hungary, and Colombia, released minutes from interest rate meetings this month in Australia and Britain, the Bank of Japan loan officer survey, and [...] More
