Many Competing Stories but a Unifying Theme is Better Growth in Europe by a Slower Trend Elsewhere

April 15, 2015

ECB President Draghi is wrapping up his press conference.  Policy wasn’t changed further.  Focus is currently on full implementation of policy initiatives taken recently.  Draghi finds the favorable impact of quantitative easing to be impressive: real interest rates have fallen as expected inflation is rising.  An important new sentence in the released statement explains what […] More

Report of Weak German Orders and a Difficult Day for the Kiwi

March 5, 2015

The New Zealand dollar sank 1.0% against the dollar and fell to a one-month low against the Australian dollar on the possibility that the Reserve Bank of New Zealand might resort to property market-specific regulatory changes instead of and delaying a near-term interest rate hike. German industrial orders slumped 3.9% in January, reversing nearly all […] More

Spotlight on Central Banks

January 21, 2015

In response to disinflationary implications of the plunge in oil prices, the Bank of Canada cut its overnight money rate target to 0.75% from 1.0%.  Oil price changes also pose downside risks to growth, which is projected to fall to around 1.5% in the first half of this year, and to financial stability.  The prior […] More

New Highs for the Dollar

January 5, 2015

Fresh U.S. dollar highs for the move were set overnight of 1.1867 per euro, 1.5178 per pound, 0.8035 per AUD, CHF 1.0295 and C$ 1.1845.  The U.S. currency is currently below its overnight peaks but retains gains from Friday’s closing of 0.8% against the euro, 0.7% versus the Swiss franc, 0.6% relative to sterling, 0.4% […] More

ECB Hidden Agenda: Weaker Euro

November 6, 2014

The ECB didn’t change its three interest rates.  The refinancing rate of 0.05% has been flanked by a marginal lending rate of 0.3% and a deposit rate of -0.20%.  Each was cut by 10 basis points in September. Draghi’s main message, emphasized in his press conference, is that the ECB balance sheet will be expanding […] More

Dollar Little Changed Ahead of Draghi Monthly Press Conference

November 6, 2014

The dollar is up 0.2% versus sterling and 0.1% relative to the loonie, unchanged against the kiwi and yuan, and down by 0.3% against the euro, 0.2% vis-a-vis the Swissie and Aussie dollar, and 0.1% relative to the yen. South Korean officials complained about the recent weakening trend of the yen and said more would […] More

Fresh Doubts about How Soon the Fed Will Raise Interest Rates

October 2, 2014

The European Central Bank holds its monthly policy meeting today.  Investors are not expecting significant new stimulus but remain guarded about that possibility.  Confidence over the past month has waned in the likely effectiveness of plans to buy asset-backed securities.  Euroland CPI inflation dipped further in September to 0.3% overall and 0.7% on core items.  […] More

Central Bank Hit Parade

September 4, 2014

In a surprise move, the ECB cut all three of its interest rates by 10 basis points to a marginal lending rate of 0.30%, a refinancing rate of 0.05%, and a deposit rate of -0.2%.  All three rates had been cut in July.  Now markets await other possible steps like the purchase of ABS securities.  […] More

Dovish Draghi

July 3, 2014

In a dovish statement and press conference, ECB President Draghi asserted that the “combination of monetary policy measures decided last month has already led to a further easing of the monetary policy stance. The monetary operations to take place over the coming months will add to this accommodation and will support bank lending. As our […] More

What Divergent Monetary Policy Biases Suggest…. Or So We’re Told

June 12, 2014

Students are taught that unsynchronized monetary policies promote currency volatility.  For bored currency market watchers, it ought to be heartening to see significant divergences among the major central bank policy biases for the first time since the European Central Bank raised interest rates in July 2008.  Now it is the ECB whose stance is most […] More