Dollar in Two-Day Plunge
December 17, 2008
From highs on Monday to lows today (Wednesday), the dollar fell 8.9% against the Swiss franc, 8.8% against the New Zealand dollar, 7.4% against the euro, 6.2% against the Australian dollar, 5.1% relative to sterling, 4.6% versus the yen and 4.3% against the Canadian dollar. These moves drive another nail into the dollar rise of […] More
Currency Markets in the News
Reaction to Federal Reserve's Radical Medicine
December 17, 2008
To paraphrase Churchill, the easing of Fed policy seems to have reached the end of the beginning. Zero central bank interest rates, popularly known by the acronym ZIRP, are virtually in place now. Policy from here will be measured by quantitative criteria, specifically the size of the Federal Reserve’s balance sheet. Such already had soared […] More
How the U.S. Current Account Deficit Was Funded in the Third Quarter
December 17, 2008
The U.S. current account gap narrowed almost 4% last quarter but at $174.1 billion still equaled a pretty sizable 4.8% of GDP. That ratio has hovered between 4.8% and 5.1% over the past year. The table below compares funding of this deficit during 3Q08 with the four prior quarters. Amounts are expressed in billions of […] More
New Overnight Developments Abroad - Daily Update
New Overnight Developments Abroad: BOJ Expected to Ease on Friday
December 17, 2008
The dollar fell 1.2% against the Swiss franc, 0.8% against the euro, 0.6% against the yen, and 0.5% against the kiwi. The greenback shows no change against the Australian dollar and gains of 0.8% against sterling and 0.2% relative to the Canadian dollar. The yen hit a new cyclical high of 88.18 per dollar. Sterling […] More
Central Bank Watch
Fed Embraces Quantitative Easing: Lessons from Japan and Implications for the Dollar
December 16, 2008
By unanimous vote the Fed reduced the Fed Funds target to a range of zero to 0.25% from a point target of 1.0%. Much more importantly, officials “will employ all available tools to promote the resumption of sustainable economic growth and to preserve price stability.” In the present context, “price stability” refers to avoiding deflation, […] More
Vital Market Signs at Selected Prior FOMC Meetings
December 16, 2008
EUR/$ $/JPY 10Y, % DJIA Oil, $ 06/30/04 1.2173 109.44 4.63 10396 37.95 06/30/05 1.2090 110.89 3.96 10370 57.00 06/29/06 1.2527 116.07 5.20 11077 73.41 06/28/07 1.3452 123.17 5.10 13456 69.82 08/07/07 1.3749 118.55 4.73 13510 72.27 09/18/07 1.3888 115.75 4.51 13475 81.42 10/31/07 1.4458 115.28 4.42 13873 93.59 12/11/07 1.4682 111.49 4.11 13645 […] More
New Overnight Developments Abroad - Daily Update
New Overnight Developments Abroad: Awaiting FOMC and U.S. CPI and Housing Starts
December 16, 2008
A mixed dollar sees such off by 0.8% against the kiwi, 0.7% versus the yen, 0.4% against the Swissy and 0.2% relative to the Aussie dollar but up by 0.3% against sterling and 0.2% against the euro. The Canadian dollar is unchanged. Equities are similarly mixed. In Asia, the Nikkei lost 2.1%, and the Philippine […] More
Currency Markets in the News
End-of-Year Bias in EUR/USD
December 15, 2008
The dollar declined between mid-December and yearend against the euro in five of the last six years, including a 1.2% drop over that period in 2007. Over those six years, the dollar posted an average drop of 1.1% in the final half of December. A seasonal drop against the mark between mid-December and end-month occurred […] More
U.S. Capital Inflows
December 15, 2008
Capital inflow financing of the U.S. current account deficit increased sharply in quantitative terms during September-October but weakened significantly in a qualitative sense. The broadest measure of net inflows reported by the Treasury Department totaled $286.3 billion in October, up from $142.6 billion in September. In contrast, there were net sales of $4.0 billion per […] More
New Overnight Developments Abroad - Daily Update
New Overnight Developments Abroad: Japanese Business Sentiment Sharply Lower
December 15, 2008
Equities rallied in the Pacific Rim and Europe despite poor Japanese and Chinese data. The Nikkei advanced 5.2%. Stocks also rose 4.9% in South Korea, 3.0% in Taiwan, 7.6% in Indonesia, 2.0% in Singapore, 1.5% in India, 2.0% in Hong Kong and 2.3% in Australia. The German Dax, Paris Cac, and British Ftse are trading […] More
