Category: Economics

Eurozone PMI Mixed while Markets are Still Waiting on Yellen


The US dollar is mostly little changed against the majors, as befits a summer session.  There are two exceptions. 

The first is the New Zealand dollar.  Comments by the central bank’s governor played down the need for urgent monetary action and suggested that the bottom of cycle may be near 1.75% for the cash rate, which currently sits at 2.0%. This means that a cut next month is unlikely.  November appears to be a more likely timeframe. 

The U.S. Dollar’s Decline Goes Against the (Fed) Grain


The US dollar has fallen against all the major currencies this month. Even the pound has gained about 0.3% against the heavy greenback. 

What is most striking about the dollar’s decline is that is has taken place despite a modest upgrade of the odds of a Fed hike.  Consider on the broadest level, the Dow Jones polls that found 71% expect a rate hike before the end of the year compared with about 50% in the July survey. 

Team Dudley Includes Fischer


Last week, some market participants were giving more credence to what seemed like dovish FOMC minutes than to NY Fed President Dudley’s remarks that accused investors of complacency over the outlook for rates.  Yesterday, Vice-Chairman of the Federal Reserve Fischer seemed to echo Dudley’s sentiment, and this has underpinned the dollar and is the major spur of today’s price action.

The Dollar, What to Watch For, and Jackson Hole


The US dollar lost ground against nearly all the major currencies last week. The sole exceptions were the Australian dollar, where pressure ahead of the weekend following Moody’s decision to cut the outlook for five Australian banks wiped out the previous small gain, and the Norwegian krone, which was really flat with less than a 0.1% loss.  

Key Ingredients for ASEAN Enterprise Success


ASEAN member states do not count for much in the global economy on their own. Indonesia, the biggest economy in Southeast Asia, has a GDP of US$861 billion, but that is still smaller than the economy of Tokyo.

Yet combined, the GDP of ASEAN member states is about US$2.6 trillion. If ASEAN were a single country, it would be the seventh largest economy in the world. In addition, in 10 years’ time, ASEAN is expected to overtake the United Kingdom and France to be the fifth largest economy — after the United States, China, Japan and Germany.

After a Rough Week, the Dollar Finds a Footing


The US dollar is trading firmly ahead of the weekend as part of this week’s losses are recouped. The gains are sufficient to put it higher for the week against the Australian dollar.  If its gains against the Aussie were sustained, it would be only the second weekly gain since the end of May.

Although the news stream is light, the Aussie has been undermined by the one of the few developments today.  Moody’s cut the outlook for five Australian banks from steady to negative, setting the stage for likely rating cuts in the coming months. 

South China Sea Relations Complicated by Pesky Geography


Despite the old adage that ‘good fences make good neighbours’, sometimes it is impossible, for a variety of reasons, to build good ‘fences’ in the sea. This is certainly the case in the South China Sea, where territorial claims are complicated by geography.

While the recent ruling by the Arbitral Tribunal in The Hague on the dispute between China and the Philippines in the South China Sea has theoretically ‘cleared the air’ on some aspects of maritime boundary-making, in practical terms it may not have helped the situation.

Maybe Wage Inflation is the Answer?


All that is solid is melting.  After Copernicus, we know that earth is not the center of Creation.  Darwin showed us that humans are part of the animal kingdom.  Freud told us we are not even masters of our own house.

Choosing between Dudley’s Comments and the FOMC Minutes


It is not a good day for the US dollar.  It is being sold across the board.  The seemingly dovish FOMC minutes released late yesterday appears to have gotten the ball rolling.  The takeaway for many was that any officials wanted more time to assess the data at the July meeting. 

Russia Flexes its Economic Leadership Muscles in East Asia


Until its 2012 APEC chairmanship and APEC Summit in Vladivostok, Russia was not a proactive participant in East Asia. Rather, it was still striving for comprehensive involvement in the network of regional institutions such as APEC, ASEAN dialogue partnership, the Asia–Europe Meeting (ASEM) and the East Asia Summit.