On Monday, the Federal Reserve met to discuss the discount rate. There has been a steady increase in the number of regional Federal Reserve presidents requesting an increase in the discount rate. The minutes of the October 26 meeting were reported yesterday.
Europe currently has approximately 900 billion euros ($956 billion USD) in bad loans, (aka non-performing loans or NPLs). The director of the Monetary and Capital Markets Department at the International Monetary Fund (IMF), Jose Vinals, announced that figure.
The divergence of monetary policy is discounted, they argued. Ahead of next week’s big events, which include the IMF’s SDR decision, the ECB meeting, OPEC meeting, and the US jobs data, the euro, against which speculators have amassed a large short position, just shy of a record, were supposed to be content.
Despite diplomatic missteps, APEC 2015 could pave way to regional peace and development. The triangular perspectives of Washington, Beijing, and Manila tell the story.
Washington’s exclusive policies
The US dollar is trading choppily but with a distinct softer bias. The economic news has been limited, and the apparent downing of a Russian plane by Turkey caused a flurry of activity, with Turkish assets coming under initial pressure which has abated somewhat.
The euro briefly dipped below $1.06 yesterday for new seven-month lows, but there was no follow through selling. As is often the case with such chart points, a snap back after the violation, the euro reached $1.0670 in early Europe.
The global financial crisis (GFC) that precipitated the worldwide great recession in 2008 has largely subsided. Capital markets are generally operating smoothly, liquidity restored and new initiatives toward financial regulation aim at reducing the likelihood of recurrence. However, in other respects the effects of the crisis live on.
After months of speculation, the USS Lassen sailed within 12 nautical miles of an artificial Chinese island on 27 October 2015. In doing so, it completed the first in a series of planned freedom of navigation operations in the South China Sea (SCS). The operation is the strongest assertion yet by the US Navy that it rejects Chinese reclamation projects, which could escalate tensions in the region.
Behind the impressive growth of the world’s two largest emerging nations, China and India, land has been a key infrastructural resource as well as a major source of social conflicts. Laws in both countries have allowed the governments to take land away from agricultural communities for industrialisation and development, while offering little compensation or no resettlement alternative in return.
With the vast majority of economists and primary dealers expecting the Federal Reserve to lift rates next month, the subject of discussion has shifted toward the pace of the hikes and the peak or terminal rate.
The dollar-bloc currencies and the Norwegian krone were the strongest major currencies last week but are leading the downside today. The slump in commodity prices is taking a toll. WTI is off by nearly 3%. Copper is off about half as much, and gold is off about half as much as copper. More broadly, the US dollar is firm across the board.
