Monetary Policy

Seemingly, out of the blue, the Swiss National Bank abandoned its cap in the Swiss franc (euro floor) and moved deeper into negative interest rates.  This has seen the Swiss franc rocket higher against the euro and dollar.  It sent...

The key axis in Europe is between creditors and debtors.  Each pushes their own interests.  The regime of austerity in Europe indicates that the creditors have had the upper hand.  However, two developments in the last two days suggest the...

The combination of the outright deflation in the Eurozone and the seemingly immunity of the US economy to the poor global developments has encouraged investors to extend the dollar's gains.  The euro has been pushed below $1.18.  Sterling neared $1.50....

The approaching New Year thins market participation.  This makes for some choppy price action.  The result is weaker equity markets and a softer US dollar.  The greenback is lower against the euro and sterling.  Sterling held just above $1.55 in...

The Swiss National Bank surprised the market by announced a negative 25 bp rate on sight deposits and lower the 3-month Libor range to -0.75% to 0.25%. Although SNB President Jordan revealed that inflows from Russia compelled it to intervene...

The Federal Reserve upgraded its assessment of the labor market, and changed the future guidance from "considerable time" to "can be patient in beginning to normalize the stance of monetary policy."  The statement also draws a distinction between market-based measures...

The US dollar's recovery that began yesterday continues today.  The euro reached the 50% retracement objective of its slide since mid-October (~$1.2565) and now is more than a full cent lower.  The dollar's slump against the yen ended just above...

Today we learn of the participation of the second opportunity to borrow funds from the ECB under the Targeted Long-Term Repo facility.  Recall that this year's access was limited to 7% of a bank's loan book (loans to households and...

The ECB meeting or more precisely, the press conference, is the main event of the day, and possibly of the week and month.  ECB President Draghi and Vice President Constancio have expressed heightened urgency to boost inflation as fast as...

The US dollar is extending its advance as the divergence theme moves into overdrive.  The dollar has drawn close to JPY119.50.  The euro has fallen to new lows near $1.2320, turning back from $1.25 on Monday.  The Australian dollar briefly...

Megan Trainor tells us it is "All About the Base".  It seems like many reporters and analysts may be mistaking her lyrics as it is all about debase, as in currency wars. The latest surge of currency war stories follow the...

After yielding ground yesterday, the US dollar comes back bid today.  The main driver is the divergence that favors the US.  Specifically, yesterday two people we have identified as part of the troika at the Federal Reserve, from where policy...

Contrary to the leaks, ECB President Draghi stuck to his intent that the ECB's balance sheet move back toward the 2012 levels.  He clearly confirmed that this was unanimous.  This was the first time, such a reference was made in...

The dollar is mixed on the day, but moves have been modest ahead of the ECB meeting. The Euro recovered to trade just above the $1.25 area and sterling is hovering just around $1.5950. The Australian and New Zealand dollars...

The US Federal Reserve this week has moved one step closer to lifting interest rates by ending its controversial bond-buying program. This begins a long-anticipated process that will take many months to complete: the metamorphosis of a dove into a...