Tag Archive: Bank of England

FX Daily, January 13: Dismal Data Undercuts Sterling and Boosts Chances of a Rate Cut

2020-01-13

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2020-01-13

Overview: There are two big stories today. The first is the large scale protests in Iran after the government admits to accidentally shooting down the commercial airliner amid the fog of war. The market impact seems minimal but fueling speculation that this, coupled with the economic hardship related to the US embargo, could topple the regime. Second, the UK reported that the economy unexpectedly contracted in November.

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FX Weekly Preview: Back to Macro?

2020-01-13

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2020-01-13

The US-China trade conflict and then US-Iran confrontation distracted investors from the macroeconomic drivers of the capital markets. It is not that there is really much closure with the exogenous issues, but they are in a less challenging place, at least on the surface. 

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FX Daily, December 19: Whiff of Inflation in the Air

2019-12-19

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2019-12-19

It is risky to read too much into the price action in holiday-thin markets, but inflation fears are beginning to surface. The price of January WTI is around $61, having tested $50 a barrel in Q3. The CRB Index made new highs for the year yesterday and is up almost 9% for the year. The US yield curve (2-10 year) has been steepening after being inverted for a few days in August, and now at nearly 29 bp, also is new highs for the year.

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FX Weekly Preview: Central Bank Meetings and Flash PMI Reports, but its Over except for the Shouting

2019-12-16

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2019-12-16

After last week's flurry of events, market activity is set to slow over the next three weeks. But what a flurry of events it was. A new NAFTA apparently has been agreed, and it is set to be approved by the US House of Representatives next week and the Senate early next year.  The US and China struck an agreement that will get rid of the immediate tariff threat and unwind half of the punitive tariffs in exchange for a commitment to buy twice the...

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FX Weekly Preview: Synchonized Emergence from Soft Patch?

2019-11-04

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2019-11-04

There have been plenty of developments warning of a global economic slowdown. Yet, seemingly to justify the continued advance in equity prices, there has begun to be talk of possible cyclical and global rebound. That is the new constellation, connecting the better than expected Japanese, South Korean, and Chinese September industrial output figures,  a slightly stronger than expected Q3  GDP reports from the US and the eurozone. 

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FX Daily, September 19: Investors Looking for New Focus

2019-09-19

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2019-09-19

Overview:  Central bank activity is still very much the flavor of the day, but investors are looking for the next focus.  The Bank of Japan and the Swiss National Bank stood pat, while Indonesia cut for the third consecutive time and the Hong Kong Monetary Authority and Saudi Arabia quickly followed the Fed. Brazil cut its Selic rate yesterday by 50 bp as widely expected.

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FX Weekly Preview: The FOMC and US Jobs Headline the Week Ahead

2019-07-29

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2019-07-29

There is little doubt that the Federal Reserve will ease monetary policy at the conclusion of the FOMC meeting on July 31. We never thought the chances of a 50 bp move were anything but negligible, though even at this late stage, the market appears to be pricing in about a one-in-five chance.

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BREXIT UNCERTAINTY TO WEIGH ON YIELDS

2019-07-26

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2019-07-26

UK 10-YEAR Gilt Yield Breakdown and Forecast, 2014 - 2019
UK sovereign bond (gilts) yields have fallen this year, with the 10-year yield dropping by 59 basis points (bps) to 0.69%1, in concert with other core sovereign bond yields. The Brexit saga, along with the global slowdown forcing many central banks to turn dovish, are the main factors behind this steep fall.

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FX Weekly Preview: What to Watch if Fed and ECB are Committed to Easing

2019-07-15

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2019-07-15

There is little doubt after the Federal Reserve Chairman Powell's testimony last week and the FOMC minutes that a rate cut will be delivered at the end of the month. Similarly, after comments by several ECB officials and the record of their recent meetin.g confirms it too is prepared to adjust policy. The timing of the ECB's move is more debatable, an adjustment at the July 25 meeting appears to have increased.

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FX Daily, June 20: Doves Rules the Roost Except in Oslo

2019-06-20

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2019-06-20

Overview:  The prospect of "lower for longer" continues to fuel the bond and stock rally.  The initial US equity response to the Fed was positive but not strong and closed about 0.3% higher.  Asia Pacific equities followed suit with mostly modest gains, except for China and Hong Kong, where gains of more than 1% were recorded.

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FX Daily, May 02: Dollar Consolidates Fed-Inspired Recovery

2019-05-02

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2019-05-02

Overview:  The US dollar is consolidating yesterday's post-Fed rally, and this is giving it a slightly heavier tone today.   Equities are mostly lower and Europe's Dow Jones Stoxx 600 is off about 0.5% in late morning turnover, which if sustained would be the largest decline in three weeks.  The S&P 500 posted a potential key reversal yesterday by setting new record highs and then closing below the previous session's low.

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Does the recent spate of Central Bank gold buying impact demand and price?

2018-11-05

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2018-11-05

There has been a lot of media coverage recently about the re-emergence of central bank gold buying and the overall larger quantity of gold than central banks as a group have been buying recently compared to previous years. For example, according to the World Gold Council’s Gold Demand Trends for Q3 2018, net purchases of gold by central banks in the third quarter of this year were 22% higher than Q3 2017, and the highest quarterly level since Q4 of...

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LBMA Clearing and Vaulting data reveal the absurdity of the London ‘Gold’ Market

2018-10-02

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2018-10-02

LBMA gold vaulting data report for end of June 2018: Published 1st October
The first day of each month sees the reporting of a number of statistics about the London Gold Market by the bullion bank led London Bullion Market Association (LBMA). These statistics focus on clearing data and vault holdings data and are reported in a 1 month lag basis for clearing activity and a 3 month lag basis for vault holdings data.

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FX Weekly Preview: Three Central Bank Meetings and US Jobs data

2018-07-30

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2018-07-30

The week ahead sees three major central bank meetings and the US employment report. It will likely be the most important work before a hiatus that runs through the end of August. Of course, and perhaps more than ever, market participants are well aware that the US President's communication and penchant for disruption is a bit of a wild card.

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FX Weekly Preview: For the Millionth Time: Investors Exaggerate Trade Tensions at Their Own Peril

2018-07-16

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2018-07-16

You would never have guessed it reading many of the op-eds and pundits pronouncing the end to globalization or the West, or liberalism. Global equities have rallied.  Of course,  stock prices are not the end all and be all, but it stands in stark contrast to the cries that the sky is falling.

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FX Weekly Preview: Geopolitics Becomes More Salient as Monetary Policy Plays for Time

2018-05-07

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2018-05-07

Say what one will, US President Trump is vigorously projecting what he believes are American interests. There is virtually no sign of the isolationism that many observers had anticipated. Indeed, as we have argued, the America First rejection of the League of Nations that Trump harkens back to was not isolationist as much as unilateralist. And the same is true of the Trump Administration.

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Turkey and Russia Highlight Gold’s Role as a Strategically Important Asset

2018-05-03

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2018-05-03

US Federal Reserve Bank Gold Holdings, Mar 2016 - 2018
On 17 April, Turkish news publication Ahval published a report stating that during 2017, Turkey withdrew 26.8 tonnes of gold that it had stored in the vaults of the New York Federal Reserve, and moved this gold under the custodianship of the Bank of England and the Bank for International Settlements (BIS). The source of the Ahval report was a Turkish language article from the popular Hürriyet newspaper in Turkey.

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FX Weekly Preview: Next Week in Context

2018-04-30

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2018-04-30

A year ago, the Dutch and French elections signaled that UK referendum to leave the EU and the US election of Trump did not usher in a populist-nationalist epoch, such as the one that proceeded the last great financial crisis. The euro gapped higher and did not look back.

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Spoofing Futures and Banging Fixes: Same Banks, Same Trading Desks

2018-04-22

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2018-04-22

Commodity Futures Trading Commision
On 29 January 2018, the Commodity Futures Trading Commission (CFTC) Division of Enforcement together with the Criminal Division of the US Department of Justice and the FBI announced criminal and civil enforcement actions against 3 global investment banks and 5 traders for involvement in trade spoofing in precious metals futures contracts on the US-based Commodity Exchange (COMEX).

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