Can the Yellen Build-up be Too Much?

The US dollar is going nowhere fast.  It is narrowly mixed against the major currencies.  The market waits for fresh trading incentives, with much hope placed on Yellen's presentation at Jackson Hole at the end of the week.  Is it too early to suggest that the build-up ahead of it is too much?

China's G20 Mission should be Clear

In December 2015, China announced that its priorities for the upcoming G20 Hangzhou summit were to make the global economy more innovative, invigorated, interconnected and inclusive. However, China is struggling to deliver practical outcomes in these areas because many of them are challenging domestic issues that lack a global focus.

Luckily, G20 finance ministers and trade ministers identified practical outcomes on the global financial safety net, growth and trade, which could be delivered, provided China is willing to broaden its priorities.

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.