New Overnight Developments Abroad - Daily Update

French Election, U.S. Holiday, and Looking Ahead to Powell Testimony Later in the Week

June 20, 2022

The second and final round of French parliamentary elections over the weekend left President Macron with significantly less political power than he enjoyed in his first five-year term. Macron’s coalition fell short of an absolute majority by over 40 seats. Both the left-wing ecologist coalition and Le Pen’s far right National Rally, which came in […] More

Foreign Exchange Insights and Next Week

Next Week’s Menu: June 18 – 24, 2022

June 17, 2022

Central Banks: Monetary policies to be reviewed in China, Euroland, Iceland, Norway, Mexico, Turkey, Georgia, Indonesia, the Czech Republic and the Philippines. Minutes of the prior meetings at the Reserve Bank of Australia and the Bank of Japan will be published. So will results of the Federal Reserve’s annual stress tests of commercial banks. Fed […] More

Central Bank Watch

Bank of Japan Stands its Ground

June 17, 2022

The Bank of Japan Board met for 4 hours 35 minutes over two days and left its short-term interest rate and 10-year JGB yield targets unchanged at -0.10% and “around zero percent.” In the 8-1 vote, Board member Kataoka once again dissented, favoring more deeply negative rates and overall stimulus. Japan’s central bank launched its […] More

New Overnight Developments Abroad - Daily Update

Volatile End to a Volatile Week as Bank of Japan Declines to Join Bandwagon of Monetary Policy Tighteners

June 17, 2022

The weighted DXY dollar index is 0.8% firmer than at Thursday’s close but 1.3% below Wednesday’s multiyear high. Against individual currencies in overnight trading, the dollar jumped 1.9% against the Japanese yen but slumped 1.6% relative to the Russian ruble. The greenback also rose 0.9% versus the Australian dollar, 0.6% vis-a-vis sterling, 0.5% versus the […] More

Central Bank Watch

Surprise Rate Hike at Swiss National Bank

June 16, 2022

Today’s biggest central bank surprise came from the Swiss National Bank, where inflation is at its highest since September 2008 but tame at 2.9% compared to inflation in other countries. Swiss officials have kept very low interest rates in order to keep the Swiss franc from climbing to very overvalued levels. For several years prior […] More

Central Bank Watch

Split Vote at Bank of England

June 16, 2022

In the wake of the Fed’s larger rate hike, some analysts had speculated that the Bank of England’s scheduled policy review yesterday and today would result in a bigger rate increase than the four previous 25-basis point moves, and three of six policymakers voted for a 50-bp hike, but the majority stuck with an incremental […] More

Central Bank Watch

Brazilian Central Bank Interest Rate Hike

June 16, 2022

The Central Bank of Brazil’s Selic rate was unanimously raised by another 50 basis points to 13.5%. Brazil is one of several Latin American countries with a legacy of past inflationary blowouts and has to be very careful in the current global environment. From a pandemic low of 2.0% up to March 2021, the Selic […] More

New Overnight Developments Abroad - Daily Update

Lots of Financial Market Churning and Central Bank Activity

June 16, 2022

Federal Reserve officials settled on a 75-basis point rate hike in the past week. Chairman Powell anticipates another increase of 50-75 basis points after the July 26-27 policy review, and updated forecasts put a 3.25-3.5% federal funds rate in play by the end of this year. The baseline projections depict a soft economic landing, but […] More

Central Bank Watch

Speed of Fed Tightening Lifted

June 15, 2022

A lack of progress toward lower U.S. inflation and various measures showing upward drift in expected inflation convinced FOMC officials to boost the federal funds rate by 75 basis points today. This follows increases of 25 basis points in March and 50 bps in May, and the decision was taken in spite of a risk […] More

Central Bank Watch

FOMC Preview

June 15, 2022

The early May FOMC meeting issued forward guidance to expect 50-basis point interest rate hikes both today and at the next policy review in late July, and that road map was the accepted wisdom until the last few days when moves of 75 basis points suddenly became the new normal. With hindsight, the FOMC should […] More

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