The EUR has underperformed most currencies this year, despite signs of strengthening economic recovery in the Eurozone. Political risk and the Greek debt merry-go-round may be weighing on the currency. Widening in Eurozone periphery bond spreads continues as a trend, and the alternative right contender in French elections in April/May Marine Le Pen is seen […]
In Q&A sessions this week, RBA Governor Lowe and RBNZ Governor Wheeler, one just beginning his tenor, the other coming to the end of his, provided some insights into how they view their economies, rates and exchange rate policies, and the isolationist rhetoric in the USA with Trump in the White House. Faced with similar […]
The RBA appears set to slightly upgrade its inflation forecasts and sound reasonably optimistic in its quarterly Statement on Monetary Policy on Friday. Governor Lowe may similarly project more optimism in his speech in Sydney on Thursday night. These events may provide support for the AUD. However, there is still scope for Lowe to show […]
An index of news articles covering economic and political uncertainty suggests that global uncertainty has never been higher. The rise in this measure of uncertainty is highest outside of the USA, suggesting that Trump’s America First policy, tense relationship with the EU, tough talk against Radical Islamic extremists and Iran, overtures towards Russia, threats against […]
The Bank of England monetary policy reports were more dovish than expected. While it significantly upgraded the growth outlook for 2017, it also revised up potential supply. In particular, it lowered its projection of the equilibrium unemployment rate from around 5% to around 4.5%; forecasting stable wage growth in a modest 2 to 3% range […]
Trump is generating considerable uncertainty over the outlook for the US and global economy. The market had taken many of the policy ideas floated by Trump during his election campaign with a grain of salt, considering them as too radical to be implemented to the extent the new President had campaigned. However, Trump is proving […]
Trump theatrics aside, USA economic data remains on a solid footing, and inflation pressure is firming to near the Fed’s target. USA interest rates and yields have been relatively stable near their cyclical highs since the Fed sounded less dovish at their December policy meeting. As such, higher yields are providing underlying support for the […]
Australian inflation momentum wanes and makes it the lowest inflation country in major and dollar bloc countries after Japan and the Eurozone. Market-based long-run inflation expectations also dipped in Australia. The relatively strong AUD continues to weigh on the inflation outcomes. The RBA is unlikely to rush to cut, but appears further away from raising […]
Trump’s inauguration day was truly shocking. In stark contrast to an expectation of a speech of hope and unity, Trump cast himself as a revolutionary leader of a new movement of the “forgotten” common man and woman ready to end the “carnage” of America and the “ravages” of foreign plunderers. He used highly nationalistic language […]
ECB maintained its aggressive accommodative monetary policy to drive home the advantage now that its economic growth and inflation outlook have improved. ECB President Draghi struck a dovish tone seeing the recent rise in headline inflation as transitory and remaining focused on the more subdued core inflation, remaining excess capacity and ongoing financial sector repair. […]