Tag Archives: FX Trends

The Bank of Japan surprised the market.  It did not expand its asset purchase plan, which was the main focus of many market participants, including ourselves.  Instead, following a rash of disappointing data, the BOJ introduced negative interest rates on some excess reserves and vowed to do more if necessary.   Today's action, like the expected decision in October 2014 to increase what Japan calls Quantitative and Qualitative Easing was on a 5-4 vote.  It has sent the yen and Japanese...

We had been tracking the budding scandal that implicated the office of Japan's Economic Minister Amari.  We had expressed our concern earlier this week that the scandal could sap Amari's office strength and be a distraction.  However, the situation unraveled quicker than we anticipated and Amari resigned earlier today.   He is the fourth ministerial resignation but by far the most important one to resign.  Abe's first term had been marred by scandals and they arguably contributed to his...

There is a mixed tone in the global capital markets today.  Asian shares were mixed with declines in the Nikkei (-.07%) and Shanghai (-2.9%) being offset by modest gains elsewhere.  European bourses are also mixed and the Dow Jones Stoxx 600 is off slightly.  European bonds benchmark bond yields are lower though US yields are firmer.   The US dollar has a softer tone though its losses are largely concentrated in against the Antipodean currencies and the Canadian dollar.  The New Zealand...

I was a guest on "What'd You Miss" on Bloomberg TV this afternoon, shortly after the markets closed.  Alix Steel, Joe Weisenthal, and Scarlet Fu, and I discussed two main issues.    Click here to see the seven minute clip.   The first was the EU's approval, finally, of the establishment of a "bad bank" in Italy.  It will ostensibly help  address the bad loan problem that has been one of the factors that have prevented a stronger recovery in the third largest country in the euro area.   I...

The Federal Reserve tweaked its economic assessment, but generally kept the underlying message the same.  It sees slack in the labor market continuing to be absorbed and believes the economic conditions warrant a gradual increase in rates.  The market was looking for a more dovish statement, but the message is little changed from December.   The Fed continues to see the decline in oil prices as having a transitory impact on inflation. It also maintained the decline in import prices will...

For at least a couple of years before the Great Financial Crisis, policymakers often cautioned that investors were mispricing risk.  Through the crisis, investors became painfully aware of many risks, including counterparty risk and reputation risk.  Now many observers are highlighting a new risk, what they call the credibility of central banks.   The issue is that many central banks are nowhere close to reaching their inflation targets.  ECB President Draghi seems to agree.  The ECB has...

The US dollar is broadly mixed as attention turns to the FOMC statement later today.   The most important development has been the unexpectedly large oil inventory build reported by the API ahead of today's government estimate.   The 11.4 mln barrel build is the largest in nearly two decades.  To put the rise in perspective, consider that the US output is around 9.2 mln barrels a day.    The news keeps the price of crude volatile, and yesterday's $1.10 increase in the March light sweet...

Equities and oil continue to be moving in the same direction. During the first few weeks, they were moving down together and now up together.   It is frustrating for asset managers.   Large cap and small cap stocks moving together as if everything is being tarred with the same brush.  We continue to try to tease out the relationship between equities and oil prices, but there is some underbrush needed to be gotten rid of before we can have a clear space to share our tentative...

Reports indicating that Italy is close to establishing a bad bank prompted one wag to ask if  Italy does not already have enough.  The country may be better served by setting up a good bank.  The sharp sell-of in shares of Italian banks this year is an important driver of G7-leading 12.4% slide in the local bourse this year.   The Renzi government has been trying to establish a "bad bank" to warehouse the non-performing loans (NPLs) that are hardening the arteries of Italy's financial...

With equities sliding and oil pushing back below $30, it may feel like the resumption of moves in the first two and half weeks of the year, but it is different.  It is considerably more orderly.  The contagion from the equity and oil slide is more limited than previously, and even oil is recovering in the European morning to trade back above $30.  European equities opened lower but spent the morning recovering, even if not fully.   The change is also evident in the foreign exchange...