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Yesterday when summarizing the Fed's action we said that in its latest dovish announcement which has sent the USD to a five month low, the Fed clearly sided with China which desperately wants a weaker dollar to which it is pegged (reflected promptly in the Yuan's stronger fixing overnight) at the expense of Europe and Japan, both of which want the USD much stronger. ECB, BOJ don't want a weak dollar; China does not want a strong dollarFed sides with China for now — zerohedge (@zerohedge)...

  Producer and Import Price Index in February 2016 0.6% decline in Producer and Import Price Index Neuchâtel, 17.03.2016 (FSO) – The Producer and Import Price Index fell in February 2016 by 0.6% compared with the previous month, reaching 99.0 points (base December 2015 = 100). Whereas the Producer Price Index declined by 0.5%, the Import Price Index fell by 1.0%. The decline is due mainly to lower prices for chemical and pharmaceutical products as well as petroleum products. Compared with...

17.03.2016 09:15  - FSO, Prices (0353-1602-50) Producer and Import Price Index in February 2016 0.6% decline in Producer and Import Price Index Neuchâtel, 17.03.2016 (FSO) – The Producer and Import Price Index fell in February 2016 by 0.6% compared with the previous month, reaching 99.0 points (base December 2015 = 100). Whereas the Producer Price Index declined by 0.5%, the Import Price Index fell by 1.0%. The decline is due mainly to lower prices for chemical and pharmaceutical products...

The Federal Reserve halved the number of rate hikes it anticipates this year from four to two.  The market has been moving toward this as well after having thought the would be no hikes this year.  The dollar sold off.  The dollar-bloc currencies and emerging market currencies are have rallied sharply. Risk assets in general like the idea of a less hawkish Federal Reserve.   The Fed's dot plots point to a Fed somewhat less confident on the near-term outlook but maintained the...

The EU leaders summit on refugees begins tomorrow.   A conclusive agreement will likely be elusive.   There are three main obstacles.  First, the effort to reinforce the external borders to allow free internal movement requires Turkey's cooperation, but it won't be represented.  Second, that is important because Cyprus is demanding more concessions by Turkey.  Third, others such as Spain,  are concerned that the strategy contravenes EU and international law by abridging the right to...

Since the Federal Reserve hiked rates in December, both the European Central Bank and the Bank of Japan have eased policy further.  The idea that because they cut rates means that the Fed cannot raise rates is a not a particularly helpful way to think about that is happening.   The market attributes practically no chance for a Fed hike today.  But the FOMC is expected not to back off very much from its view that contrary to what some have argued, the December rate hike was not a mistake,...

If UK Chancellor of the Exchequer Osborne wants to position himself to be the next Prime Minister, the budget to be unveiled tomorrow may not be particularly helpful.  There is little room to relax fiscal policy, given the self-imposed constraints.   The deficit for the current fiscal year was projected to be GBP73.5 bln, but through January, the deficit has been GBP66.5 bln.  This suggests the deficit will be closer to GBP80 bln.    The budget deficit was 4.4% of GDP last year, down from...

The market's focus has shifted to the two-day FOMC meeting that begins today.  The Federal Reserve should be pleased with recent developments.  Labor market slack continues to be absorbed.  Core inflation measures continue to edge higher.   Market-based measures of inflation expectations have risen, and the 10-year breakeven is a little above levels that prevailed before the December FOMC meeting.  The volatility in the capital markets that characterized the first six weeks of the year...

The US dollar is steady to firmer against most of the major and emerging market currencies.  Equity markets are heavier, and oil continues to surrender some of its recent gains.  Profit-taking is weighing on eurozone bonds and JGBs while US Treasuries and UK gilts are firmer.   The main exception to the firmer dollar is the Japanese yen.  The Bank of Japan left policy unchanged, as widely anticipated.  Its assessment was seen as somewhat less dovish than many expected.  While...

The price of oil is seeing its biggest decline today since February 23.   The ostensible reason is that Iran once again reiterated it would only consider capping its output after it reached four million barrels a day, its pre-sanction output.  Last month, the Saudis and Russia (joined by Venezuela and Qatar) indicated they were prepared to freeze output on the condition that the Iranians (and others would join).  It was clear that the Iranians could not and would not join.  Iran had just...