Deeper Analysis
January in Figures
January 31, 2013
The euro strengthened against most currencies in January including the Swiss franc and sterling but especially versus the yen. Shifts in Japanese macroeconomic policies and the weakness of the yen gave a big lift to Japanese equities. Other stock markets also improved, but those in Germany and Canada rose by comparatively less. A notable exception […] More
Foreign Exchange Insights and Next Week
Euro Bearing the Indirect Brunt of Currency Warfare
January 31, 2013
When excessive inflation poses a larger risk than deficient economic growth, strengthening currencies are coveted to promote price stability and low interest rates. This is not one of those times, and besides short- and long-term interest rates are already too low, many would argue. History demonstrates, however, that unilateral efforts by policymakers to depreciate their […] More
Central Bank Watch
Bank Malaysia Negara Keeps Monetary Stance Left Unchanged
January 31, 2013
Malaysia’s overnight central bank interest rate has been at 3.0% since a 25-basis point increase in May 2011 culminated four such moves, the first of which was made in March 2010. The benchmark will remain at that level following today’s first policy meeting of 2013. The second meeting is scheduled for March 7 and, judging […] More
New Overnight Developments Abroad - Daily Update
Dollar Steady on Final Day of January
January 31, 2013
The dollar is unchanged against the yen, yuan, and Swiss franc, up 0.1% versus the euro, loonie, Australian dolar and sterling, and off 0.1% against the kiwi. Share prices in the Pacific Rim closed up 0.2% in Japan and Taiwan but down 0.6% in India, 0.5% in the Philippines, and 0.4% in Australia and Hong […] More
Central Bank Watch
Reserve Bank of New Zealand
January 30, 2013
The Official Cash Rate of the RBNZ, which has been at 2.5% since a 50-basis point cut in March 2011 soon after the South Island earthquake, was again left at that level and called “appropriate” in a statement from Governor Wheeler. 2.5% matches the Great Recession low following seven cuts between July 2008 and June […] More
Central Bank Watch
New FOMC Statement Not More Hawkish than December Statement
January 30, 2013
Based on minutes of the December meeting, it had seemed plausible that the Fed might tweak the communication of its policy in such a way as to suggest greater consideration over an earlier end to quantitative easing than imagined previously. That didn’t happened. Nor did today’s statement change any existing policy, which was as analysts […] More
Deeper Analysis
A Few Observations on the U.S. GDP Report
January 30, 2013
Analysts had anticipated slower economic growth in the final quarter of 2012 but not a 0.1% annualized contraction of GDP. The politician/layman’s definition of a recession requires two straight quarters in which real GDP shrinks. The more technical requirements of the economists entrusted with dating economic downturns looks at monthly data for such things as […] More
Central Bank Watch
FOMC Preview
January 30, 2013
Substantial market changes have occurred since the previous FOMC meeting seven weeks ago. Quantitative monetary easing hasn’t prevented the ten-year treasury yield from rising 32 basis points to 2.02%. The dollar has appreciated 9.4% against the yen but fallen by 3.5% against the euro. The price of West Texas Intermediate crude oil has advanced a […] More
New Overnight Developments Abroad - Daily Update
FOMC Day Among Other Things (Like the First Estimate of 4Q U.S. GDP)
January 30, 2013
The yen fell to its lowest dollar level (91.43) since June 7, 2010 and its weakest quote against the euro (123.89) since May 4, 2010, while the Nikkei-225 closed above 11,000 for the first time since May 5, 2010. The euro reached its strongest level against the dollar (1.3564) since November 22, 2011. On balance […] More
Central Bank Watch
Sixth Straight Hungarian Central Bank Rate Cut
January 29, 2013
The two-week deposit rate of the Magyar Nemzeti Bank has been reduced by 25 basis points to a 34-month low of 5.5% that remains elevated compared to the level of rates elsewhere in Europe. The rate has been cut by a total of 150 basis points since August, and this month’s reduction was authorized in […] More
