It seems that every time that Capital markets start to feel optimistic this so-called US recovery disappoints. Yesterday’s disappointing US data (weekly claims, Philly Fed and housing starts) are renewing the debate whether tapering Fed bond buying in the second half of this year would be premature. An end to stimulus would probably see the Fed hiking the Fed Funds rate. A current concern is that with tapering the market seems to automatically link and end to QE with higher…

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The increase in the volume of commentary from Germany as to how uncomfortable they are becoming to ECB’s monetary policy stance is certainly more noticeable – Germany is clearly against further ECB stimulus. Chancellor Merkel and some of her policy makers are feeling uneasy about the high level of liquidity, the ‘long’ period of low interest rates and what impact this is having on the various asset classes.
However, the difference this time is that the ECB policy makers are…

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Now what? The FX market has got what it been coveting for many months, albeit a few weeks earlier than originally planned – USD/Yen trading north of the psychological 100 print. The pair, currently meandering through ‘no-mans territory’ is more influenced by the markets perception of the Fed’s attitude towards QE and a potential exit strategy rather than Abenomics reasoning. Is the market to grind out further dollar supporting gains or are investors to reload on pullbacks and keep…

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The two year reprieve granted to France to bring its budget deficit to under 3% of GDP is a sign that the austerity drive is easing in Europe, which should prove supportive for risk currencies and risk assets. European policy makers are moving closer to slowing the austerity drive designed to balance budgets with much of the Eurozone periphery in the grips of an economic depression…

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In FX, the antipodeans stole the show again overnight. Their respected currency enthusiasm has not been able to spill over into the Euro session ahead of the Bank of England rate announcement. On all accounts the option corralled 17-member single currency requires a significant catalyst to break ranks – all week long the markets lack of conviction has kept many investors on the sidelines seeking belief in their reform fatigued currency.
‘Down-under’ currencies could not just do that –…

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The European Central Bank held rates.

The interest rate on main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will remain unchanged at 0.75%, 1.50% and 0.00% respectively. Draghi takes will make a the official ECB statement and take questions from the media in today’s press conference. (8:30AM EDT; 12:30 GMT)…

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