Sterling
Unlikely to Stop the Risk Aversion Express
September 23, 2011
Risk aversion, which benefits the dollar and yen, has taken hold of all financial markets, and confidence-boosting factors are nowhere in sight. First, the economic backdrop among advanced industrialized nations recently began a fifth year of bleakness. Substantial balance sheet deleveraging remains to be done, and these economies still cannot sustain recoveries without macroeconomic support. […] More
The Top Concern is the Euro Debt Crisis
September 16, 2011
Next week’s main anticipated event will be the FOMC meeting on Tuesday and Wednesday, but the central problem weighing on global financial market psychology continues to be the euro area’s sovereign debt crisis. Greece remains the likeliest domino to fall. A default by Greece before yearend is considered likely, and Greek long-term interest rates remain […] More
America’s Turn to Face the Music
July 22, 2011
One should resist the temptation to be overly cynical about the new rescue package for Greece. True, each previous attempt by officials failed eventually to defuse the euro debt crisis and prevent contagion within the monetary union despite initial signs of success in many instances. Why should this be any different? This new deal will […] More
G-7 Economies in Crisis
July 8, 2011
The euro area’s sovereign debt crisis began in mid-November 2009 when Eurostat, the EU statistical agency, revised Greece’s fiscal deficit sharply higher. The crisis has been a tale of contagion to other peripheral members of the common currency area, repeated aid packages to cauterize the problem, sky-high peripheral bond yields, and the mounting belief that […] More
Focus on the Euro
June 24, 2011
The perceived insolvency of Greece continues to temper the euro’s strength. The common currency as of 18:00 GMT today was trading at $1.4176, down from Friday closing levels of 1.4289 on June 17, $1.4337 on June 10 and $1.4625 on June 3. A 2011 peak of $1.4941 on set on May 4. The euro has […] More
Sterling Lifted by Bank of England Inflation Report
May 11, 2011
The pound gained 0.7% against the dollar and 0.9% versus the euro. The catalyst for the advance was a quarterly central bank report that sees a likelihood of on-year British inflation topping 5.0% later in 2011. Inflation will probably stay above its 2.0% target until the first quarter of 2013, and the report implies a […] More
Currency Performance and Economic Growth: The Relationship is Not What You’d Think
May 10, 2011
Strong economic growth is often cited as a condition that will deliver currency strength. At last month’s press conference, for example, that contention was part of Fed Chairman Bernanke’s answer given to a question about what the central bank is doing to secure a strong and stable dollar. By promoting its dual mandate of jobs […] More
Stocks Down on a Busy Tuesday
April 12, 2011
Equities fell 1.7% in Japan and Taiwan, 1.5% in Australia, 1.6% in South Korea, 1.3% in Hong Kong, 1.2% in Malaysia, 0.7% in Indonesia, Singapore and the Philippines, and 1.0% in India. In Europe, the Paris Cac, German Dax and British Ftse have lost 1.1%, 1.0% and 0.9% so far. The dollar is mixed, with […] More
Yen Intervention Just One of Several Currency Market Themes
March 18, 2011
Using many arguments, analysts like to downplay the usefulness and effectiveness of currency market intervention whenever that policy tool is employed. They say central banks lack the firepower to move a market with daily volume that exceeds $4 trillion, that intervention gives speculators an opportunity to book profits, and that only intervention that is done […] More
A Murkier Currency Market Outlook Due to the Uncertain Fate of Oil Prices
February 25, 2011
A risk remains that oil and other commodity prices will remain extremely volatile in the period ahead. The market is trading on political news headlines and therefore intrinsically less stable than when markets march to the beat of economic data. At the high of $103.41 per barrel yesterday, oil prices had shot up 22.6% since […] More
