On Tuesday, Fonterra’s GlobalDairyTrade biweekly dairy auction results are released around 14:00 to 15:00 GMT, the Q4 New Zealand labour data is due at 21:45 GMT and the RBNZ Governor discusses the economic outlook and the policy targets agreement 2:15 hours later at 00:00GMT. These events have the capacity to set the tone for the […]
The base line view of many economists and commentators is that the RBA statement does not need to change much, and the RBA can stick to its current economic forecasts. This is true, but the risk is that the RBA provides a more accommodative policy guidance to further boost growth and to address the increased risk […]
The Bank has cut the effective cash interest rate to -0.1% from +0.1% (-20bp). Banks will be required to pay 0.1% on balances held in their current account that are above a certain threshold. In order not to tax banks too much, the BoJ has introduced a three-tier system with current account balances up to the […]
The Fed has lost visibility and is in wait-and-see mode; a hike in March looks unlikely given the recent weaker growth trend in US data. This should contain the USD. EUR’s strength is a bit surprising in light of still low inflation expectations and ECB policy guidance. We are favoring short EUR vs commodity currencies and […]
More stability in oil prices, anticipated policy easing by the ECB, intensified efforts in China to control its currency, and a Fed that is keeping its policy options open and likely to delay policy tightening on recent ebbing trends in US growth and global market uncertainty are likely to combine to support global equity markets […]
In the wake of the very dovish stance taken by the ECB, firmly communicated by its President Draghi last week, and the push-back on rate hike expectations in the UK by BoE Governor Carney, the market is keenly watching the FOMC statement on Wednesday and the BoJ policy statement on Friday. Judging by comments made […]
The market has become remarkably correlated with oil prices, and has lost sight of broader economic and policy developments that may occur. Policy makers are likely to step into the fray to offset the negative market action and bolster confidence. At this same time it can be argued that the market has over-reacted to an […]
The Bank of Canada established an easing bias, expressed worries over the rapid fall in the currency, but was accepting of a weaker trend in the exchange rate. It set out an optimistic set of economic growth forecasts, but delving deeper into their monetary policy report they hang more on a hope and a prayer. […]
Bank of England Governor Carney said all the factors that might have triggered a rate hike this year have turned the other way. Sounding emphatically dovish a hike is no-where in sight. Perhaps as important is what this view translates to the USA. While Carney himself noted several reasons why a hike in the US […]
US interest rates have fallen significantly this year (-36bp) reducing the USD yield advantage. This has been matched by the GBP and CAD, but AUD and NZD rates have been much more stable than previous episodes of global risk aversion. The Fed is sticking to its outlook for gradual policy tightening, but weak growth is […]