Archive for July 2011

Central Bank Watch

Hungarian Central Bank Leaves 6.0% Key Rate and Releases Dovish Statement

July 26, 2011

The two-week Hungarian deposit rate has been at 6.0% since a 25-basis point hike in mid-January, which had been the third consecutive monthly hike of that same size.  Policy has been paused for the past half year, and a dovish statement from the Magyar Nemzeti Bank after this month’s meeting reiterates the views that GDP […] More

Central Bank Watch

Reserve Bank of India Tightens By More Than Expected

July 26, 2011

India’s repo and reverse repo rates were increased by 50 basis points each to 8.0% and 7.0%.  The repo rate has been raised five times so far in 2011 by a combined 175 basis points.  Such follows six increase during 2010 totaling 250 basis points.  The cash reserve requirement ratio was kept steady at 6%. […] More

New Overnight Developments Abroad - Daily Update

Investors Bracing for Increasingly Likely U.S. Credit Downgrade

July 26, 2011

Many people, discouraged by the political comments Monday night of Obama and Boehner, now believe the U.S. AAA credit rating will be cut even if a post-August 2 default is averted.  Gold hit a record high of $1624.30 but is unchanged on balance at $1613.80 per ounce. Oil prices firmed 0.5% to $99.70 per barrel. […] More

Central Bank Watch

Bank of Israel Key Rate Left Unchanged

July 25, 2011

Israel’s main central bank rate will stay at 3.25% for at least another month.  It was raised from a trough of 0.5% by 75 basis points in 2009, 75 bps in 2010, and 125 bps earlier this year.  The most recent change was enacted in May, a gain of 25 bps. A statement on the […] More

Deeper Analysis

How Will Markets React if the United States Government Defaults?

July 25, 2011

Nobody really knows the answer to the above question with certainty.  It’s a mystery. Governments that defaulted in the past have been punished but not with equal severity, and a U.S. default would contain many unique elements.  The United States is the world’s biggest economy.  The dollar dominates reserve asset portfolios and has no serious […] More

New Overnight Developments Abroad - Daily Update

No Progress in U.S. Debt Ceiling Talks

July 25, 2011

Risk-on trading has returned.  The Swiss franc and yen rose 1.8% and 0.5% against the dollar, which has also slipped 0.2% against the euro and 0.1% relative to the Canadian and New Zealand dollars.  The dollar has firmed 0.1% against sterling and is unchanged versus the yuan.  Gold leaped 1.2% to $1620.20 per ounce. No […] More

Foreign Exchange Insights and Next Week

Next Week

July 22, 2011

Hungary and New Zealand have scheduled interest rate policy meetings next week, and the Fed Beige Book gets published.  The regional Federal Reserves in Richmond, Kansas City, New York and Dallas released manufacturing survey results, and the Chicago and Milwaukee purchasing manager surveys arrive, too. The rest of the U.S. data calendar is led by […] More

Foreign Exchange Insights and Next Week

America’s Turn to Face the Music

July 22, 2011

One should resist the temptation to be overly cynical about the new rescue package for Greece.  True, each previous attempt by officials failed eventually to defuse the euro debt crisis and prevent contagion within the monetary union despite initial signs of success in many instances.  Why should this be any different?  This new deal will […] More

New Overnight Developments Abroad - Daily Update

Markets Accepting Greek Rescue Plan So Far

July 22, 2011

Markets so far have not challenged the new EUR 109 billion EU rescue plan for Greece, which entails selective defaults, a doubling of loan maturities, and reduced lending rates.  Attention now turns to the U.S. debt ceiling negotiations, where time remaining to do a deal is getting dangerously short. Stocks in the Pacific Rim climbed […] More

Deeper Analysis

An Abrupt Cool-Down in the Euro Area’s Economy

July 21, 2011

The table below compares purchasing managers’ survey readings in July to quarterly average readings going back to the final quarter of last years.  Participants in each monthly survey are asked to report if conditions have improved, held steady or deteriorated since the prior survey, and the numbers are compiled in such a way that a […] More

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