Foreign Exchange Insights and Next Week
Easter-Time 2011
April 21, 2011
The Good Friday/Easter holidays constitute the second quietest time of the year in foreign exchange trading. Only at year-end does one find more markets observing closures. Easter 2011 finds the dollar at extremely weak levels, and more and more market watchers worrying about a dollar crisis. The dollar has set record lows against the Australian […] More
Central Bank Watch
Status Quo Maintained in Turkish Monetary Policy
April 21, 2011
The Central Bank of the Republic of Turkey is engaged in an experiment of low interest rates, higher reserve requirements and a wide gap between its overnight borrowing rate of 1.5% and lending rate of 9.0%. The main one-week repo rate was slashed by 1025 basis points between November 2008 and November 2009 and, more […] More
New Overnight Developments Abroad - Daily Update
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
Central Bank Watch
A Smaller Brazilian Rate Hike
April 20, 2011
Brazil’s committee of monetary policymakers, known as COPOM, has implemented its sixth rate hike of the cycle, increasing the benchmark Selic rate to 12.0% from 11.75%. In the earlier Great Recession, the Selic rate was cut in five moves from 13.75% at the end of 2008 to 8.75% by July 2009, and that low was […] More
Central Bank Watch
Swedish Repo Rate Raised 25 Basis Points to 1.75% in Expected Move
April 20, 2011
Before today’s action, the Executive Board implemented four 25-bp rate hikes in the second half of 2010 and a fifth increase from 1.25% to 1.5% in mid-February. The Riksbank is among very few central banks that publishes a non-binding expected path for its benchmark interest rate, and this remains unchanged from what officials were expecting […] More
Central Bank Watch
Icelandic Monetary Policy in Limbo
April 20, 2011
For a second meeting in a row of the Sedlabanki Monetary Policy Committee, the 7-day collateralized lending rate has been kept unchanged at 4.25%. From a peak of 18%, the key rate had been reduced fifteen times starting with a 100-bp cut on March 2009 through a 25-bp move on February 2 of this year. […] More
Central Bank Watch
A Sixth Central Bank Rate Hike in Thailand
April 20, 2011
The Bank of Thailand’s one-day repo rate was lifted as expected to 2.75% from 2.5%, and a statement from the central bank left the door open for more hikes. Indeed, this was the sixth done so far, each by 25 bps, following moves last July, August, December, January, and March. Central bank authorities are more […] More
New Overnight Developments Abroad - Daily Update
Stocks, Euro and Commodity Prices Score Solid Gains
April 20, 2011
Financial markets reacted positively to a slew of corporate earnings reports that surpassed expectations. Equities rose 1.8% in Japan, 1.9% in India, 2.2% in South Korea, 2.0% in Taiwan, 1.6% in Hong Kong, 1.7% in Indonesia, 1.4% in Pakistan, 1.1% in Thailand and 1.0% in New Zealand. This strong rise intensified in Europe, with the […] More
Deeper Analysis
Bond Yields, Debt Supply, and Inflation
April 19, 2011
The ten-year bond yields in the United States, Germany, Britain, and Japan remain low despite higher inflation and rising concern about the sustainability of excessive fiscal deficits and debt. Bond spreads have not shifted materially among these four advanced economies, either. The table below compares the current sovereign ten-year yields to period averages since 1990. […] More
New Overnight Developments Abroad - Daily Update
Stock Market Slide Pauses in European Session
April 19, 2011
Following the share price slide Monday in Europe and North America, stocks fell by 1.2% in Japan, 1.3% in Hong Kong, 1.9% in China, 1.4% in Australia, and 0.6% in the Philippines, South Korea and Singapore. But in Europe, the Paris Cac, British Ftse and German Dax have recovered 0.7%, 0.5%, and 0.4% on good […] More
