Archive for July 2012

Foreign Exchange Insights and Next Week

How Quickly Can the Euro be Depreciated?

July 26, 2012

An Op-Ed article by renowned Harvard Professor Martin Feldstein in this past Wednesday’s Financial Times proposes a rapid and extensive debasement of the euro as a possible remedy to preserve the common currency and Spain’s membership in such.  One day later, ECB President Draghi promised market players that the central bank will do what is […] More

Central Bank Watch

A Filipino Central Bank Rate Cut Catches Most but Not All Analysts by surprise

July 26, 2012

Bangko Sentral ng Pilipinas has implemented a third 25-basis point cut of its overnight repo and reverse repo rates.  The new levels are respectively 3.75% and 5.75%.  Similar reductions were announced earlier this year on January 19 and March 1.  Policy was not changed at the immediately prior meeting on June 14, but today’s move […] More

New Overnight Developments Abroad - Daily Update

Less Investor Angst than Earlier this Week

July 26, 2012

The dollar and yen have eased in tandem by 0.8% relative to the kiwi, 0.6% versus the Aussie dollar, and 0.5% against the euro, Swissie, loonie, and sterling.  The dollar also has edged 0.1% lower against the Chinese yuan. Stocks in the Pacific Rim rose 0.9% in Japan, 0.8% in New Zealand, 0.7% in South […] More

Central Bank Watch

Reserve Bank of New Zealand Policy Still on Hold

July 25, 2012

For the eleventh scheduled policy meeting at the RBNZ in a row, officials decided not to change the 2.5% Official Cash Rate, which is at an all-time low.  The OCR was slashed during the Great Recession from 8.25% to 2.5%, a level reached at the end of April 2009.  There were two subsequent hikes of […] More

Deeper Analysis

Britain’s Calamitous Economy and A Cautionary Tale

July 25, 2012

According to the Cameron government’s first estimate, British real GDP contracted for a third straight period in the second quarter and at an intensifying annualized rate of 2.7%.  That drop was twice as rapid as the pace sustained from October 2011 to March of this year and depressed on-year growth to negative 0.8% from four-quarter […] More

Central Bank Watch

A Split Interest Rate Vote in Thailand

July 25, 2012

The Bank of Thailand’s Monetary Policy Committee disagreed 5-2 in its interest rate decision, with five committee members claiming “the current monetary policy stance to be accommodative enough to support domestic economic growth going forward and cushion, to some degree, against global economic risks.”  The other two officials voted to cut the one-day 3.0% repo […] More

New Overnight Developments Abroad - Daily Update

Dollar’s Turn to Decline

July 25, 2012

Wednesday trading has seen a slight correction.  The dollar has fallen 0.7% against the euro, which is back above $1.2100.  The dollar also fell by 0.7% relative to the Swiss franc and is off 0.5% versus the Australian dollar, 0.4% against the loonie, and 0.3% vis-a-vis the kiwi.  The dollar is 0.1% higher against the […] More

Central Bank Watch

Latest Hungarian Monetary Policy Statement

July 24, 2012

By split decision, policymakers at Magyar Nemzeti Bank agreed to an unchanged Base Rate of 7.0% today.  A released statement projected negative GDP growth this year but also noted that CPI inflation of 5.6% in the twelve months to June exceeded their expectation.  Financial markets remain fragile, and Hungary is vulnerable to fallout from the […] More

New Overnight Developments Abroad - Daily Update

Europe Gets More Bad News

July 24, 2012

Flash purchasing manager estimates for Euroland in July were released, showing an unchanged composite score of 46.4, suggesting that GDP may contract by 0.6% in the third as well as second quarters of 2012. The Moody’s rating agency lowered rating outlooks on Germany, the Netherlands, and Luxembourg to negative, citing a greater risk that Greece […] More

Central Bank Watch

Bank of Israel: Dovish Language but 2.25% Benchmark Interest Rate Not Cut This Month

July 23, 2012

  There have been four central bank rate reductions since last November, most recently on June 25.  On-year inflation of 1.0% is at the target floor.  Expected inflation lies near center-range.  Officials did not ease further in July but seem ready to do so if growth prospects worsen. The Bank of Israel will continue to […] More

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