Foreign Exchange Insights and Next Week
Three Weeks is One Thing; Three Years Is Quite Something Else
November 24, 2010
Fed officials understood the risks to the dollar from quantitative easing when its Federal Open Market Committee agreed three weeks ago to buy an additional $600 billion of longer-dated Treasury securities over eight months. They also appreciated that risks are simply this: possibilities rather than a fait accompli. The chance of a dollar decline was […] More
New Overnight Developments Abroad - Daily Update
Europhobia
November 24, 2010
Sentiment toward the euro remains poor as an increasing number of analysts postulate the possibility the union will break up. Portugal, the likeliest next target in the debt crisis food chain, has been crippled by a general worker strike to protest budget austerity. S&P downgraded Irish debt by two steps to A from AA- and […] More
Deeper Analysis
U.S. and Canadian Data
November 23, 2010
Revised U.S. third-quarter national income accounts were released today. GDP growth was revised to 2.5% from 2.0% annualized. Consumption, investment, government spending and exports were revised upward. Imports and the boost from inventory building were revised downward. The personal consumption price deflator increased 1.0% annualized. It’s now been three years since the onset of the […] More
Central Bank Watch
Polish Reference Rate Kept Steady
November 23, 2010
Narodowy Bank’s seven-day repo rate has been 3.5% since June 2009 and will remain there even though CPI inflation moved up from the targeted 2.5% in September to 2.8% in October. That was the first above-target outcome in seven months. At recent meetings, the monetary policy council has considered a rate cut and narrowly missed […] More
New Overnight Developments Abroad - Daily Update
Spike in Risk Aversion Lifts Dollar
November 23, 2010
North and South Korea exchanged artillery shells on the disputed island of Yeonpyeong with casualties reported. Stocks in the Pacific Basin slumped in response by 2.7% in Hong Kong, 2.0% in China and Singapore, 1.7% in Indonesia, 1.3% in India, 1.2% in New Zealand and Australia, 1.0% in Malaysia and 0.8% in South Korea. Japanese […] More
Central Bank Watch
Bank of Israel Interest Rate Benchmark Left at 2.0%
November 22, 2010
Israel’s central bank has implemented six 25-basis point rate hikes since August 2009, the latest being done in September of this year. Today, as in October, the key rate was left at 2.0%, but this time the rate corridor in the credit window was doubled from plus or minus 0.25% to plus or minus 0.50%. […] More
Larry's Blog
Credentials Matter
November 22, 2010
A political movement suspicious of higher education is gaining traction in the United States. I’m referring to scorn directed at people with high education credentials. A couple of recent comments left on Currency Thoughts appear to reflect this kind of anti-elitism. One on U.S. Deflation Risk: Fact or Fancy objects to the use of the […] More
New Overnight Developments Abroad - Daily Update
Two Stories Grab Market Attention
November 22, 2010
European currencies rose after Ireland’s government agreed to an EU aid package that will be used to fortify the country’s beleaguered banks. The dollar dropped 0.4% against the euro, 0.3% against the Swiss franc, and 0.2% against the yen. Irish bond yields have fallen over ten basis points on the news. S&P reduced the outlook […] More
Foreign Exchange Insights and Next Week
Next Week
November 19, 2010
Central banks in Israel, Poland, and Mexico make interest rate announcements next week, and minutes from the Fed’s meeting on November 3rd will be released. Japanese markets will be shut on Tuesday for Labor Thanksgiving Day, and U.S. Thanksgiving holiday is on Thursday. In recent years many businesses have remained closed on the day after […] More
Foreign Exchange Insights and Next Week
U.S. Thanksgiving Break Finds a Confusing Currency Muddle
November 19, 2010
All the major currencies are carrying some piece of negative baggage. The Fed is running an easier monetary policy than other central banks without commensurably weaker U.S. growth prospects. Sovereign debt strains are slamming Euroland’s so-called peripheral economies one by one, generating some doubt that the euro will hold together indefinitely. Persistent Japanese deflation was […] More
