One of the most significant new developments in the global post-global financial crisis (GFC) economy is the enormous asset purchase programs implemented by central banks in the industrial world to stimulate their economies. Widely known as quantitative easing (QE) programs, their impact has been substantial.
The US dollar is posting modest upticks against most of the European currencies and the Canadian and Australian dollars. However, it has fallen against the yen and taken out the recent low, leaving little between it and the May 3 low near JPY105.50. The New Zealand dollar though is the strongest of the major currencies; gaining 1.5% following the RBNZ’s decision to leave rates on hold, and signal of little urgency to cut again in the near-term.
The most important element in next week’s FOMC meeting may come from the dot plot and whether the Fed officials are backing away from the two hikes thought appropriate in March.
When looking the schedule of FOMC meetings, and understanding that when the Fed says “gradual” to describe the normalization process, it does not mean hiking at back-to-back meetings, seeing two hikes this year without a summer move is difficult.
While most people spend a good proportion of their life at work, few will ever stop to consider whether their work is meaningful. “Meaningfulness” is not something that tends to feature in our daily thoughts, preoccupied as we often are by more mundane matters like rent, bills and lunch.
India’s West Asian diplomacy has undergone a remarkable shift, with Iran becoming a major foreign policy priority for the Modi government. Modi’s recent visit to Iran on 22–23 May resulted in the signing of 12 agreements in areas ranging from trade and commerce to security and counterterrorism, emphasising this progress.
The foreign exchange market is quiet. The euro remains confined to the narrow range seen on Monday between $1.1325 and $1.1395. We continue to look for higher levels near-term as the drop from May 3 (~$1.1615) to May 30 (just below $1.11) is corrected. A move above $1.1420 would likely spur more buying.
The future of the Transatlantic Trade and Investment Partnership (TTIP) between the US and European Union seems bleak. Beset by doubts and stumbling alongside the UK’s referendum on EU membership, the TTIP is starting to look like an awful lot of effort for unremarkable gains.
The Japanese yen is the only major currency not to be gaining against the US dollar. Emerging market currencies, save the Chinese yuan, are also advancing against the greenback today. The yen rose 3.5% against the dollar last week, and rising equities and commodities are weighing on the yen.
The dollar rose to almost JPY108 in Asian trading and is consolidating in the European morning. The JPY108.30 area is the first retracement objective, which is a little above the five-day moving average (~JPY108.05).
Virtually every Asian academic, business leader, policymaker or taxi driver I have encountered in the last six months has, within minutes, pummelled me for answers to the Trump question.
In March, the ECB decided to increase its asset purchases from 60 to 80 bln euros a month and to include corporate bonds. The corporate bond-buying program begins this week. We use an FAQ format to discuss the key issues.
What is the ECB doing? The ECB will buy euro-denominated, investment grade bonds from companies incorporated within the Eurozone.
What is the duration of the corporate bonds that the ECB will buy? The ECB will purchase bonds that mature in six months to 30 years.
