Central Bankers in Spotlight

September 16, 2014

The Federal Open Market Committee begins a 2-day policy meeting today.  Chair-person Janet Yellen holds a press conference Wednesday.  Macroeconomic forecasts will be presented, and new forward guidance language is anticipated.

Bank of Japan Governor Kuroda said the yen’s depreciation had on balance done more good than bad for Japan’s economy.  Some firms had complained recently about higher import costs.

Minutes from the Reserve Bank of Australia’s policy meeting earlier this month called the Aussie dollar fundamentally overvalued but also expressed some concern about home price inflation.  Chris Kent, a high RBA official, echoed the point about a need for a softer Aussie dollar, which softened overnight to USD 0.8989 but is currently trading back above 90 cents. 

The U.S. currency is unchanged overnight versus the loonie and euro, up 0.3% against sterling, 0.2% relative to the kiwi, and 0.1% vis-a-vis the yuan and Australian dollar.  The dollar has dipped 0.2% against the Swiss franc and 0.1% relative to the yen.

Share prices fell by 2.0% in China, 1.2% in India and Singapore, 0.9% in Hong Kong and Taiwan, 0.5% in Australia and 0.2% in Japan.  The German Dax has slipped 0.3%, and the Paris Cac and British Ftse are 0.4% softer.

Oil ($92.88 per barrel) is unchanged from the Monday close.  Gold has risen 0.3% to $1,239.1 per ounce.

The 10-year German bund and British gilt yields edged a basis point lower, while Japanese sovereign debt is unchanged.

The German ZEW Institute released latest investor sentiment indices for Germany and the whole euro area.  The German expectations index fell another 1.8 points to a reading of 6.9 last month and 27.1 in July, while the current situation measure of 25.4 was down from 44.3 in July.  Euroland’s ZEW expectations scored a 43.8 after 53.8, and the current situation index of 25.4 was down from 23.7 the month before.

Hourly labor costs in the euro area posted a four-quarter 1.2% rise in the second quarter of 2014, unchanged from the pace between 2Q12 and 2Q13 but up from 0.6% in the first quarter.

Czech producer prices were unchanged in August from a year before.

Foreign direct investment in China fell 14% between August 2013 and August 2014 and was 1.8% lower in January-August than a year before.

Several British price statistics were reported today.

  • CPI inflation edged lower to 1.5% in August from 1.6% in July, but core consumer price inflation ticked up to 1.9% from 1.8%.
  • Total and core retail price inflation slid 0.1 percentage points to 2.4% and 2.5%, respectively, last month.
  • Producer output prices and producer input prices fell by 0.3% and 7.2% between August 2013 and August 2014.
  • ONS reported that house prices increased 1.6% on month and accelerated to an 11.8% 12-month increase in August from 10.3% in July.

Scheduled U.S. data releases today are producer prices, the Treasury Department’s monthly compilation of international capital flows, and weekly chain store sales.

Copyright 2014, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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