Foreign Exchange Insights and Next Week
Next Week
September 14, 2012
The line-up of scheduled central bank monetary policy meetings next week includes those in Japan, India, and South Africa. The Reserve Bank of Australia and Bank of England release minutes from their meetings earlier this month, and the Swiss National Bank publishes its quarterly Bulletin. The Bank of Japan’s monthly economic assessment is due. Preliminary […] More
Foreign Exchange Insights and Next Week
A Telling Week in Foreign Exchange
September 14, 2012
Market reactions to the ECB and Federal Reserve monetary initiatives this month have clarified why the euro fell earlier this year and exposed underlying vulnerability in the dollar. Euro weakness reflected the perceived imminence of a breakup among common currency users and not very much else. In turn, dollar sentiment appears more fragile than comparisons […] More
New Overnight Developments Abroad - Daily Update
Strong Reactions in Stocks, Bonds, Oil and the Dollar
September 14, 2012
Overseas markets overnight continued to react to the Fed’s announced QE3 plan, which will be more open-ended than its two predecessors. The euro is trading near its daily high of $1.3097 and also stronger on its crosses. The U.S. currency is 0.8% weaker against the common European currency since Thursday’s close and shows other losses […] More
Central Bank Watch
Central Bank of Chile: No Rate Change
September 13, 2012
A statement after Chilean monetary authorities left their key interest rate at 5.0% asserts that production and demand in Chile are growing at near-trend rates. A stronger peso and slightly sub-target inflation (2.6%) are noted, too, but so are tight labor markets and some moderation of euro area financial tensions. The present policy stance is […] More
Deeper Analysis
The Bernanke Press Conference: What it Tells Me
September 13, 2012
The return to quantitative easing was driven by disappointment over the rate of labor market improvement. Fed officials are looking at the totality of labor market data, not just the jobless rate and growth of employment but also the participation rate, the length of long-term unemployment, the full time/part time composition of unemployment and estimates […] More
Central Bank Watch
FOMC Statement
September 13, 2012
The rumored steps of fresh monetary stimulus were essentially correct despite a statement that upgraded the assessment of overall economic activity as well as views of household spending and the housing sector. Inflation was ruled “subdued” after the prior observation on August 1 that such had “declined since earlier this year.” Jeffrey Lacker, Richmond Fed […] More
Central Bank Watch
FOMC Preview: Markets Counting on Easing Gesture
September 13, 2012
Analysts expect a concrete easing action of some sort from the Federal Reserve, particularly after Chairman Bernanke’s dovish remarks at Jackson Hole that expressed dissatisfaction with the U.S. Labor market. Gestures can take any number of forms: tweaking the projected likely date of an initial fed funds rate increase, cutting the interest on bank reserves, […] More
Central Bank Watch
Swiss National Bank Frustrated the Franc Isn’t Weaker
September 13, 2012
In August 2011, Swiss monetary authorities cut the 3-month Libor target to zero to 0.25% with a point objective of 0.0%. This imposition of ZIRP (zero interest rate policy) was followed one month later by a euro floor of CHF 1.2000 that the central bank has enforced with currency intervention and other steps. These actions […] More
Central Bank Watch
The Philippines: Interest Rate Policy on Hold Amid Balanced Risks
September 13, 2012
Officials Bangko Sentral ng Pilipinas implemented three cuts of the overnight borrowing rate or reverse repo earlier this year in January, March and July, which depressed such to a record low of 3.75%. That stimulus, according to a statement after today’s meeting, continues to work its way through the economy. Monetary authorities feel that the […] More
Central Bank Watch
Bank Indonesia Leaves Reference Interest Rate Steady at 5.75%
September 13, 2012
The last three interest rate changes, all cuts totaling 100 basis points, were administered in October 2011, November 2011 and February of this year. The current level of 5.75% is below the Great Recession trough of 6.50% and represents a record low. A statement from the central bank’s Board of Governors projects ample growth consistent […] More
