We expect the RBA to cut this week, but are not convinced and agree with the 60% chance of 25bp cut priced into the market. A cut this week is consistent with the policy prescription set out in the RBA Statement on Monetary Policy in May when the RBA cuts rates for the first time […]
The USD’s performance last week was particularly lackluster after what should have been a supportive FOMC statement, and it was slapped back into a broad down-trend by a disappointing BoJ meeting and a weak US Q2 GDP report. Not only did the BoJ fail to meet expectations of more QQE/NIRP, its decision to raises ETF […]
The broad fall in the USD and lack of rates market response to a somewhat less dovish FOMC statement is curious and suggests that the Fed is suffering a credibility problem. The market appears to doubt that the Fed will walk the talk. A combination of diminishing yield and caution in equities markets after the […]
The USD has been weak this year as the Fed has allowed global economic and financial market uncertainty to put its rate hikes on ice. Domestic economic conditions have been resilient to global developments, but not strong enough to demand Fed action. The rebound in US payrolls in June did more to boost US and […]
The USD/JPY may have reached a high this week ahead of the 29 July policy meeting, but it has recovered significantly since the Abe election triumph and breached key resistance around 105 to 105.50. Much depends on the BoJ monetary policy meeting on 29 July. The JPY has rallied after every policy meeting this year […]
The RBNZ “Economic Update” released on its website today significantly expanded its views on the NZD exchange rate, suggesting that it will cut rates at its next policy meeting on 11 August in an attempt to offset or weaken the currency. It said today, “The trade-weighted exchange rate is 6 percent higher than assumed in […]
The rebound in USD/JPY this week could be a key development for global markets. It could signal a shift in sentiment that has driven global bond yields and break-even inflation expectations to record lows. A confusing year for markets made worse by a rebound in JPY Global financial markets have been confusing this year, […]
I am on the Australian Gold Coast this week enjoying some warmer Queensland weather after a frigid week near Canberra and on the Southern New South Wales coast. It is interesting to see the Australian media dissect the national election down-under and everyone thinks this is going to be a messy dysfunctional parliament that achieves […]
Preparations for Brexit were minimal by government, business or even financial markets. The outcome has been a significant shock. The event has left UK politics reeling and investors from mum and pops up will be figuring out what to do with their not so Great British Pounds. Euros will also have a question-mark over them […]
The Fed FOMC was quite dovish and pessimistic by downgrading the outlook for rates over the medium term to reflect a weaker outlook for US growth potential. This may reinforce the weaker USD trend that has taken hold since early this year. The Fed has proven very sensitive to the payrolls report and even more […]