Foreign Exchange Insights and Next Week
Next Week
July 31, 2015
Central Banking Beat: Interest rate policy meetings at the Bank of England, Bank of Japan, Czech National Bank, Reserve Bank of Australia, Reserve Bank of India, Bank of Thailand, and Romanian National Bank. The Bank of England’s quarterly Inflation Report arrives, and Bank of Japan Governor Kuroda holds a press conference. Holiday Closure: Canadian August […] More
Central Bank Watch
Another Step Made in the Unwinding of Last Year’s Russian Monetary Tightening
July 31, 2015
Russia is grappling with a bad case of stagflation that combines a deepening recession with inflation that’s above 15% and still cresting. The ruble’s vulnerability magnifies the central bank’s difficult task balancing these two extremes. The emphasis in 2014 was on fighting inflation, but in 2015 officials have switched the stress back to growth. In […] More
Central Bank Watch
Bank of Mexico
July 31, 2015
Mexico’s main central bank interest rate has been kept at 3.0% after another policy meeting. Such was cut from 8.25% to 4.25% in the first seven months of 2009 and the rest of the way to the current level between March 2013 and June 2014. Inflation has fallen to a 45-year low somewhat below the […] More
New Overnight Developments Abroad - Daily Update
Monthend Finds Dollar and Stocks Mixed and Commodities Lower
July 31, 2015
With July drawing to an end, the dollar rose overnight by 0.8% against the kiwi, 0.5% versus the Aussie dollar, 0.,2% relative to the loonie and 0.1% against the yen and sterling. But the dollar also fell 0.7% against the Swiss franc and 0.4% vis-a-vis the euro. The yuan is steady. The Shanghai Composite index […] More
Deeper Analysis
Comment on U.S. GDP
July 30, 2015
The U.S. economy rebounded in the spring from a weather depressed first quarter. At 2.3%, the annualized growth of real GDP was very close to market expectations, four times faster than the first-quarter pace, but hardly better than what’s come to be the economy’s average performance. The six-year-long post-Great Recession upswing has produced an average […] More
New Overnight Developments Abroad - Daily Update
Lots of Data and Another Drop in China’s Stockmarket
July 30, 2015
The dollar rose overnight by 1.0% against the kiwi, 0.4% versus the yen, Swissie and Australian dollar, and 0.2% relative to the loonie, euro and sterling. The yuan continues to be held steady, but Chinese stocks slumped 2-3%. in other Pacific Basin markets, equities dropped 1.1% in Singapore, 0.9% in South Korea and 0.6% in […] More
Central Bank Watch
Central Bank of Brazil Tightens Monetary Policy Again in Face of Accelerating Inflation and Contracting GDP
July 29, 2015
Copom, Brazil’s monetary policy committee, started raising its short-term Selic interest rate from a base of 7.25% in April 2013. Inflation then of 6.6% was above target and threatening to send inflation expectations upward. Over the ensuing year to April 2014, the Selic rate was increased by 3.75% to 11%, and policy tightening was put […] More
Deeper Analysis
FOMC Policy Statement a Very Close Facsimile of the Prior One
July 29, 2015
Officials made even fewer modifications in the wording than the scant amount I was expecting, and the only changes came in the first paragraph describing economic conditions. The labor market — both job growth and unemployment — were upgraded, but the overall assessment of moderately expanding activity, sub-target inflation, low market-based measures of inflation compensation, […] More
Central Bank Watch
FOMC Preview
July 29, 2015
The last FOMC meeting on June 16-17 upgraded growth on improved household consumption, spoke of continuing progress on the mandates to maximize employment and secure a 2.0% inflation target, but decided that more evidence of sustained growth and higher inflation are needed before beginning to normalize the federal funds rate. Energy and the dollar, two […] More
New Overnight Developments Abroad - Daily Update
Dollar Marking Time Ahead of Today’s FOMC Announcement
July 29, 2015
The FOMC policy statement will be released at 18:00 GMT (14:00 EDT). There is no press conference or release of updated forecasts. No policy change is expected, but investors are unsure if the statement will provide clarifying information regarding the likelihood of a rate hike at September’s meeting. I look for vagueness on that regard, […] More
