The US dollar has continued to sell-off post-FOMC meeting against most of the major currencies. The euro traded above $1.14 for the first time in a month. Sterling moved above $1.59 to new highs for the year. The dollar has moved back toward the lows spurred by BOJ Kuroda’s recent comments about the yen’s effective exchange rate.
The FOMC message is that it is still on course for hiking rates later this year. The Fed previously told us it would taper, and it did. It told us that there would be a “considerable period between the end of QE and the first rate hike, and there is. It has said that it anticipates that the economic data will allow it to raise rates later this year.
The recent general election offered the electorate a big fiscal choice over the speed and extent to which the deficit, and public spending, should be cut. The electorate plumped for the bigger, swifter cuts on offer. However, we were not offered much choice on the shape of the cuts. There was, for example, complete unanimity on the need to protect spending on health and pensions at the expense of most other spending. In addition, we certainly were not faced with the big, longer term, choices that we will have to make in response to growing pressures created by an ageing population.
In June 2015, negotiators concluded discussions in Singapore on draft Articles of Agreement of the nascent Asian Infrastructure Investment Bank (AIIB). India is a founding member of the AIIB and expects to have the second-largest shareholding after China. Global media attention has focused primarily on the challenge that the AIIB poses to the US-guided World Bank, and Japan-led Asian Development Bank (ADB), as well as the initially somewhat sour reception the AIIB has received from the US authorities.
Many expected Japan–Republic of Korea (ROK) relations to reset when the Shinzo Abe and Park Geun-hye administrations first came to power, but the past two years or so have seen further deterioration and pessimism.
News on the US economy has been all over the map. A lower than expected expansion during the winter months earlier this year caused many to decry recovery efforts and proclaim the US economy in a second recession. Yet other analysts more optimistically pointed to sectors that did expand and indicators that showed future improvement in those that lagged. This tennis match of expert opinions has left many investors uncertain what the future will hold for the US economy or how to analyze its recent performance.
One of the biggest debates among world policy makers has been whether it is possible to reduce the world’s greenhouse gas emissions without adversely affecting economic performance. Now, a new report indicates that these two objectives, once believed to be conflicting in nature, may actually be within the world’s grasp.
It was supposed to be all about the Federal Reserve today, but the strong UK’s weekly earnings data has sent sterling to four-week highs and brought forward market-based measures of the BOE’s first rate hike. Previously, the SONIA forwards had implied that the UK’s lift-off would take place in July-August 2016. With today’s news, it comes forward to near June.
The US Environmental Protection Agency (EPA) last week issued a “proposed finding” that greenhouses gases from aviation pose a danger to the health and welfare of current and future generations. It could pave the way for regulations to limit domestic US aircraft emissions – but there are plenty of hurdles still to jump before that happens.
The Labour leadership race is hotting up – and it is interesting to watch how the various candidates are going about convincing party members that they are fit to hold the reins of leadership. With runners and riders now all declared and primed for their first hustings, it is telling that they are all suffering, to various degrees, from anonymity problems.
