Foreign Exchange Insights and Next Week
Unresponsive Currencies
April 18, 2013
The wonderful thing about currency markets is the virtually limitless range of determinant factors, and these have been days full of unprecedented and unexpected developments. The continuing inertia of several key dollar relationships is thus surprising, and that suggests a structural reduction in the intrinsic volatility of currency movement. The table below compares current dollar […] More
Central Bank Watch
Central Bank of Brazil Tightens Monetary Policy for First Time since July 2011
April 18, 2013
Brazil’s Selic Rate was raised 25 basis points to 7.5%, breaking a streak of ten consecutive cuts totaling 525 basis points between August 2011 and October 2012. Brazil is slipping into stagflation. The easing earlier was a response to progressive slower economic growth that remains anemic. But inflation accelerated from 6.0% in January to 6.59% […] More
New Overnight Developments Abroad - Daily Update
Spotlight on the United States
April 18, 2013
The IMF/World Bank spring meetings in Washington D.C. kick off today. G20 finance ministers and central bank chiefs attending those meetings will be holding separate talks and issuing a communique that reportedly calls on all nations not to devalue competitively but does not single out Japan explicitly. The governor of India’s central bank said intervention […] More
Central Bank Watch
Later Onset of Rate Increases Signaled by the Bank of Canada
April 17, 2013
From a low of 0.25%, the target Canadian overnight rate was lifted three successive times in June, July and September 2010, but no further rate normalization has been engineered during the ensuing 31 months. The key rate will remain at 1.0% according to today’s third scheduled policy announcement of 2013, which was synchronized with the […] More
Central Bank Watch
Riksbank Executive Board Retains 1.0% Swedish Repo Rate but Lowers Projected Future Rate Path
April 17, 2013
The repo rate needs to remain at a low level for a longer period of time to support the recovery to ensure that inflation rises towards the target. …Gradual increases in the repo rate are not expected to begin until the second half of 2014, which is around a year later than the earlier forecast. […] More
New Overnight Developments Abroad - Daily Update
Fresh Wave of European Anxiety
April 17, 2013
After constructive sessions overnight in Asian trading, European stocks again hit the skids. The dollar is up and commodities are lower. There have been unconfirmed speculation that German debt might suffer a rating downgrade. Construction output in the euro area fell 0.8% in February on top of a 2.1% slump in January. Construction had contracted […] More
Central Bank Watch
Sri Lankan Monetary Policy Left Unchanged
April 16, 2013
The Monetary Board of the Central Bank of Sri Lanka retained a 7.5% repo rate and a 9.5% reverse repo rate but hinted of possible further easing later this year. Monetary policy measures taken so far indicate that expected results are being realised, providing reasonable stimulus for a higher economic growth. At the same time, […] More
Central Bank Watch
Turkish Interest Rate Cuts
April 16, 2013
This month’s interest rate meeting at the Central Reserve Bank of Turkey yielded a statement that cut all three interest rates by 50 basis points. The one-week repo rate, the main policy signal, had bee cut previously by 50 basis points in August 2011 and by another 25 bps in December 2012, now becomes 5.0% […] More
New Overnight Developments Abroad - Daily Update
Picking Up the Pieces
April 16, 2013
Monday was an extremely difficult day for financial markets. A poisonous atmosphere was well established even before the terrorist explosions in Boston. Gold was in freefall, posting the worst selloff in decades on fear of European government sales. Chinese data had been disappointing, and worries about the U.S. economy had resurfaced. The mood overnight was […] More
New Overnight Developments Abroad - Daily Update
Gold Plunges More than $100/Oz
April 15, 2013
The free-falling price of gold is 7.4% lower than its Friday close and, at $1,389.90, at its weakest level since February 18, 2011. Oil has plunged 3.5% to $88.13 per ounce, lowest since December. Commodity-sensitive currencies have been depressed sharply. The U.S. dollar has risen 1.3%, 1.1% and 0.8% against its New Zealand, Australian and […] More
