New Overnight Developments Abroad - Daily Update
Bank of Japan Unveils New Policy Guidelines
December 18, 2009
The yen fell 0.5% against the dollar and by more against other currencies overnight. The greenback otherwise lost 0.7% against the Canadian dollar, 0.4% against the Aussie dollar and Swiss franc, 0.3% against the euro and sterling and 0.1% against the kiwi. Stocks mostly fell in Asia but show gains in Europe. In sympathy with […] More
Central Bank Watch
No Turkish Rate Cut This Month But No Sign Either When Tightening Will Start
December 17, 2009
The Central Bank of the Republic of Turkey failed to cut its key rates for the first month since October 2008 and removed the “easing bias.” However, a statement by officials emphasized that it would be necessary to keep policy rates low for a long period of time.” The key borrowing and lending rates are […] More
Central Bank Watch
Key Hong Kong Interest Rate Kept at 0.5%
December 17, 2009
The Hong Kong Monetary Authority does not have an independent domestic monetary policy, only a 26-year-old policy to peg its exchange rate around 7.75 per U.S. dollar. The HKMA takes its marching orders from the Fed and, accordingly, left its key interest rate at 0.5% following news from the FOMC that the Fed funds rate […] More
New Overnight Developments Abroad - Daily Update
Dollar and Yen Sharply Higher
December 17, 2009
The dollar shows similar advances of 1.3% against the Australian dollar, 1.2% against sterling, the kiwi, and euro, and 1.0% relative to the Swiss franc and Canadian dollar. The greenback is only 0.1% firmer against the yen, however. Lots of short dollar positions getting stopped out. FOMC statement seen as mostly dollar-supportive. Senate Banking Committee […] More
Central Bank Watch
Fed Statement As Expected
December 16, 2009
Analysts weren’t looking for any remarkable initiative in the FOMC statement, and that’s what they got. Economic conditions are better from the standpoint of the employment situation, income growth and financial market conditions, but officials reiterated that “exceptionally low levels of the federal funds rate” are likely “for an extended period.” I’d bet this pretty […] More
Deeper Analysis
How the Third-Quarter U.S. Current Account Deficit Was Funded
December 16, 2009
The $108.0 billion current account deficit in 3Q09 equaled 3.0% of GDP, similar to the ratios of 2.8% in 2Q09 and 2.9% in the first quarter but well below a deficit equal to 5.1% of GDP a year earlier. The value of the deficit was $10.1 billion or 10.3% wider than in the second quarter. […] More
Central Bank Watch
Vital Market Prices at the Time of Prior FOMC Meetings
December 16, 2009
The FOMC is not expected to change its Fed funds target, nor is the conditional guidance that “exceptionally low rates for and extended period” likely to get modified further. The last statement of November 4 made news by imposing three conditions to that pledge: low resource utilization (which can be determined from the jobless rate […] More
Central Bank Watch
Norwegian Central Bank Tightens
December 16, 2009
Norges Bank officials also surprised most analysts, only they raised rates whereas Czech monetary officials cut them today. This disparity underscores the transitional nature and uneven properties of the world business cycle as analysts await the results of the Fed’s last meeting of 2009 to be announced in less than 3-1/2 hours. Norway’s central bank […] More
Central Bank Watch
A Surprise From the Czech Central Bank
December 16, 2009
By a narrow 4-3 vote, monetary officials in the Czech Republic voted to reduce the key two-week repo rate and the Lombard rate each by 25 basis points to 1.0% and 2.0%, respectively. Most analysts were not anticipating a further ease in light of higher-than-expected November CPI results that swung the on-year inflation rate from […] More
Central Bank Watch
No Change in Swedish Monetary Policy
December 16, 2009
As analysts predicted, the Riksbank repo rate was left at 0.25%, and the projected future path of that rate was also not changed. That forecast anticipates no increase in central bank rates until the final quarter of 2010 and a subsequent climb to 2.4% by 4Q11 and 4.1% in 4Q12. Quantitative easing in via fixed […] More
