ECB Invokes Strong Vigilance to Achieve Medium-Term Price Target and Anchor Expected Inflation

June 9, 2011

A statement from the ECB signals a likely increase of interest rates next month.  Sufficient justification for a second tightening by July was provided by the Bank staff’s revised price and growth projections, the evolution of which can be seen below.  Both estimates for year 2011 were revised higher, especially CPI inflation, which is now […] More

In Limbo Between the ECB Decision and the U.S. Jobs Data

May 6, 2011

The ECB’s apparent decision to delay a second interest rate hike until at least July sent the euro down as much as 2.6% intra-day against the dollar on Thursday.  As investors await the other main event of the week, the U.S. Department of Labor April Jobs report, the dollar is unchanged from its close yesterday […] More

Investors Avoiding Risk as Central Banks Meet

May 5, 2011

The yen strengthened beyond 80/USD for the first time since March 18, touching a high of 79.58 and climbing 1.1% on balance. Central banks in Malaysia and the Philippines hiked key interest rates by 25 basis points today. Central banks are also meeting in the U.K., Euroland, and the Czech Republic.  Markets are positioned for […] More

Broad-Based Dollar Losses

April 21, 2011

The dollar fell overnight by 0.9% against sterling, 0.7% versus the Canadian, New Zealand and Australian dollars, and 0.5% against the yen, Swiss franc and yuan.  The dollar hit its weakest levels since December 4, 2009 against sterling, December 15, 2009 against the euro, and February 27, 2008 against the kiwi.  Record lows were set […] More

ECB Signals Likelihood of a Much Sooner-Than-Expected Rate Increase

March 3, 2011

While proclaiming that the ECB Governing Council never pre-commits to a future interest rate change, President Trichet used code language to suggest a major likelihood of a rate increase in April. He Said “strong vigilance is warranted with a view to containing upside risks to price stability.” Failed to say current rate levels including the […] More

European Stocks Up Ahead of ECB Press Conference

March 3, 2011

Stocks are up 1.4% in Paris and Frankfurt and 1.3% in London ahead of the ECB press conference that starts at 13:30 GMT.  The ECB left rates unchanged.  Earlier today, equities gained 0.9% in Japan, 1.4% in Taiwan, 2.2% in South Korea, 0.5% in New Zealand and Malaysia, and 0.3% in Singapore, Thailand and Indonesia. […] More

Dollar Down Despite Concern over Libya

February 23, 2011

Libya’s turmoil, where Qaddafi clings to power, should help the dollar in two ways: by spawning generalized flight to the safety of Treasury securities and by raising concern about Euroland’s troubled southern tier, which imports most of Libya’s oil exports.  Nonetheless, the dollar fell overnight by 0.7% against sterling, 0.6% versus the euro, 0.5% against […] More

ECB Monitoring Inflation More Closely

January 13, 2011

The ECB did not let above-target CPI inflation for the first time since November 2008 go unanswered. By unanimous vote, they inserted the following language into their press conference statement: We see evidence of short-term upward pressure on overall inflation, mainly owing to energy prices, but this has not so far affected our assessment that […] More

Kiwi Up, Swissy Weaker

January 13, 2011

The U.S. dollar advanced 0.7% against the Swiss franc but softened 0.5% against the New Zealand dollar.  The greenback otherwise edged up 0.2% against the Canadian dollar and 0.1% versus sterling and the yen but slid by 0.1% against the euro, yuan and Aussie dollar.  Officials fixed the yuan at its strongest U.S. dollar level […] More

ECB Meeting Preview: No Meaningful Policy Changes

January 12, 2011

During this prolonged span of ultra-low interest rates, the Governing Council of the European Central Bank has preferred to introduce initiatives and pertinent information at its March, June, September, and December meetings.  Those are the months when new staff projections are unveiled.  Officials will find no compelling reason to break this pattern.  This is unlikely […] More