Currency Thoughts

Surprise Decision from the Bank of Korea

larrygreenberg — Thu, 09 Sep 2010 02:49:35 +0000

South Korea’s seven-day repo rate was left at 2.25%. Even though officials had paused tightening at their previous meeting of August 12 following an initial 25-basis point increase on July 9, most analysts were predicting a second 25-bp hike today. At 2.25% versus a previous cyclical high of 5.25% prior to August 2008, the key [...]

On the Swiss Franc, Deutschmark, and Euro

larrygreenberg — Wed, 08 Sep 2010 18:24:21 +0000

An article by Peter Garnham on page 23 of today’s Financial Times makes the claim that the Swiss franc “is increasingly being viewed as the proxy for the old Deutschmark.” Among all paper currencies in times of trouble, investors prefer francs most as a store of value. Historically speaking, a more accurate portrayal is that [...]

A Third Rate Hike in Canada

larrygreenberg — Wed, 08 Sep 2010 13:51:23 +0000

After earlier increases on June 1 and July 20, the Bank of Canada hiked its target overnight rate by 25 basis points for a third time today. Roughly three of every five analysts foresaw that result versus others who anticipated no change. The decision was taken in spite of a downward forecast for projected Canadian [...]

Festering Concern about Euroland Peripherals

larrygreenberg — Wed, 08 Sep 2010 11:39:25 +0000

Stocks in Germany, France and Great Britain have traded 0.6% lower. Earlier, equities fell by 2.2% in Japan, 1.5% in Hong Kong, 0.8% in Australia, 0.5% in South Korea and 0.4% in Taiwan and New Zealand. The euro recouped 0.2% against the dollar despite provocative warnings from German Chancellor Merkel about her country’s limited patience [...]

Preview: Wednesday’s Bank of Canada Decision is a Very Close Call

larrygreenberg — Tue, 07 Sep 2010 16:11:25 +0000

When a second 25-basis point rate hike to 0.75% was announced on July 20 following a first such increase on June 1, Canadian monetary officials repeated the guiding remark about the future: “Given the considerable uncertainty surrounding the outlook, any further reduction of monetary stimulus would have to be weighed carefully against domestic and global [...]

Australian Monetary Policy Declared "Appropriate" and Left on Hold

larrygreenberg — Tue, 07 Sep 2010 14:12:57 +0000

As widely expected, Australia’s Official Cash Rate (OCR) was left at 4.5%. A statement from the Policy Board of the Reserve Bank of Australia observed that the terms of trade (export/import price ratio) is back at its 2008 high and buoying Australian incomes. The overall economy has been growing at a clip that is near [...]

Nothing New Expected or Delivered from the Bank of Japan Policy Board After Latest Meeting

larrygreenberg — Tue, 07 Sep 2010 13:40:02 +0000

Just a week before its regular September meeting, the Policy Board had held a three hour six minute unscheduled meeting that by an 8-1 vote had increased the amount of money to be provided through fixed-rate funds-supplying operations to banks against pooled collateral, so no additional easing was to be expected at this time. The [...]

Fresh Concerns about Ezone Peripheral Economies

larrygreenberg — Tue, 07 Sep 2010 11:33:37 +0000

The euro fell 0.9% against the dollar. Stocks have declined 1.4% in Madrid, 1.2% in Paris, 1.0% in Zurich, 0.9% in London and 0.7% in Frankfurt. Ten-year sovereign bund and gilt yields are six and four basis points lower. Bond spreads between Euroland’s peripherals and Germany have widened to more than 935 basis points in [...]

Bank of Japan Preview

larrygreenberg — Mon, 06 Sep 2010 17:38:52 +0000

The regularly scheduled monthly meeting of the central bank Policy Board is today and Tuesday. However, an unscheduled meeting just a week ago caved into to mounting political pressure and took the comparatively modest step of introducing a JPY 10 trillion, six-month cheap fixed-interest loan facility for banks to complemented already existing 3-month facilities. JPY [...]

Summer’s End

larrygreenberg — Mon, 06 Sep 2010 12:25:57 +0000

Unlike the four seasons of nature, the currency market year sub-divides into three parts: winter/spring, summer, and autumn. In forex, the U.S. Memorial Day and Labor Day holidays are the bookends of summer. Note, too, that these the three trading seasons have different lengths. The first period from from New Year’s Day to Memorial Day [...]