Tag Archive: federal-reserve

Quantitative Easing: A Boon or Curse?

Central banks’ massive Quantitative Easing (QE) programs have come under scrutiny many times since the central banks fired up the printing press and began quantitative easing programs en masse after the 2008-09 Great Financial Crisis. However, the increase in central bank assets due to quantitative easing programs during the crisis pale in comparison to the QE programs during the Covid pandemic. As economies recovered after the...

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FX Daily, July 15: Strong Gains in US CPI and PPI Don’t Stop the Bond Market Rally

Strong inflation prints this week have not prevented the long-term US interest rates from tumbling. The 10-year yield is about 10 bp lower than where it closed on Tuesday after the lackluster 30-year auction. The 30-year yield itself is 11 bp lower.

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FX Daily, July 14: RBNZ Moves Ahead of the Queue, Will the Bank of Canada Maintain its Place?

The Reserve Bank of New Zealand jumped to the front of the queue of central banks adjusting monetary policy by announcing the end of its long-term asset purchases. New Zealand's s 10-year benchmark yield jumped seven basis points, and the Kiwi is up almost 1%, to lead the move against the greenback today.

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Measuring Inflation and the Week Ahead

There is quite an unusual price context for new week's economic events, which include June US CPI, retail sales, and industrial production, along with China's Q2 GDP, and the meetings for the Reserve Bank of New Zealand, the Bank of Canada, and the Bank of Japan.

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FX Daily, July 08: Capital Markets Remain Unhinged

The dramatic move in the capital markets continues. The US dollar is soaring as yields and equities slide. The US 10-year yield has fallen below 1.30 to 1.26%  European benchmark yields are 1-4 bp lower, while Australia and New Zealand have seen a 7-9 bp drop today.

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FX Daily, June 24: Did the PBOC Signal it is Content with the Yuan’s Pullback?

The US dollar is trading slightly lower against most of the major and emerging market currencies. The Scandis are leading the major currencies, while the Russian ruble leads the central and eastern European currencies higher. Emerging market currencies mostly firmer, though the Turkish lira and South African rand are notable exceptions.

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FX Daily, June 23: Japan Retains Distinction of being the only G7 Country with Sub-50 PMI Composite

Federal Reserve officials, lead by Chair Powell, pushed gently against the more hawkish interpretations of last week's FOMC meeting. Tapering not a rate hike was the focus of discussions. Powell reiterated that price pressures would prove transitory and would ease after the re-opening disruptions settled down.

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FX Daily, June 22: Turn Around Tuesday or Dollar Rally Resumes?

Firming long-term US yields have lent the dollar support after trading heavily yesterday. The greenback is around 0.15%-0.50% higher against the major currencies. The Japanese yen and Canadian dollar are among the more resilient, and the Australian dollar and sterling among the heaviest.

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FX Daily, June 21: Dollar Surge Stalls

Pressure on equities seen last week carried over into Asia and Europe today. The MSCI Asia Pacific Index fell for the fourth consecutive session, led by more than a 3% decline in the Nikkei. Australia, Taiwan, and Hong Kong bourses fell by more than 1%. European equities opened lower, but have turned higher.

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FX Daily, June 18: Markets Quiet Ahead of Triple Witching

After some dramatic moves over in the immediate post-Fed period, the markets have quieted. The kind of volatility that is sometimes associated with triple witching expirations in the US may have already taken place. Asia Pacific equities were mixed, but the MSCI benchmark finished with its second consecutive weekly decline. 

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FX Daily, June 17: Fed Rocks the World

A more hawkish than expected Federal Reserve sent the US dollar and interest rates higher and spurred an equity sell-off. The knock-on effect sent ripples through the capital markets today. Most equity markets in the Asia Pacific region fell. China, Hong Kong, and Taiwan were notable exceptions.

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FX Daily, June 03: Don’t Believe Sino-American Thaw or Fed’s Corporate Bond Divestment is a Policy Signal

Market participants appear to be biding their time ahead of tomorrow's US jobs report as they digest recent developments. The dollar is firmer, equities are mixed, and benchmark bond yields are a little firmer. China and Hong Kong shares continue their recent underperformance, while most of the large markets in the Asia Pacific region edged higher.

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FX Daily, June 02: The Dollar Snaps Back

The US dollar is enjoying broad, even if not large, gains today following yesterday's recovery from three-year lows against sterling and four-year lows against the Canadian dollar. The greenback is firmer against all the major currencies.

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FX Daily, May 26: RBNZ Joins the Queue, while Yuan’s Advance Continues

The decline in US rates and the doves at the ECB pushing back against the need to reduce bond purchases next month have seen European bond yields unwind most of this month's gain. The inability of US shares to hold on to early gains yesterday did not deter the Asia Pacific and European equities from trading higher.

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FX Daily, May 20: Market Stabilize after Yesterday’s Tumultuous Session

US equity indices finished lower, but the real story was their recovery. Asia Pacific equities were mixed, with Australia's 1.5% rally leading the recovery in some markets, including Tokyo and Singapore. Europe's Dow Jones Stoxx 600 is up a little more than 0.5% near mid-session, led by information technology and industrials, while energy and financials lagged with small gains.

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FX Daily, May 18: Risk Appetites Return Bigly

In Asia, equities markets rallied strongly, led by the more than 5% gain in Taiwan, the most in over a year as Monday's 3% drop was more than overcome. The Nikkei gained more than 2% despite the deeper than expected contraction in Q1 GDP. Hong Kong, South Korea, and India also rose more than a 1% gain as tech came roaring back.

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FX Daily, May 10: The Dollar Remains on the Defensive

Last week's cyberattack on the largest US gasoline pipeline continues to lift oil and gasoline prices. The June gasoline futures gapped higher to extend last week's 2.4% gain but has subsequently moved lower to enter the gap. 

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The Dollar and the Fed

One of the stark developments since the initial shock of the pandemic has been the aggressiveness of the US monetary and fiscal response. This was also true in dealing with the Great Financial Crisis. The divergence then and now had shaped the investment climate.

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FX Daily, April 29: US GDP: The V

Overview:  The market's initial reaction to the Federal Reserve statement and the press conference was that it was dovish: the 10-year yield slipped, and the dollar was sold to new lows.  In fact, the two countries that appear to be ahead of the curve among high-income countries, Canada and Norway, saw their currencies rally to new three-year highs.

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FX Daily, April 28: Biden and Powell are Center Stage

Overview: It appears that the backing up of US yields is giving the dollar a better tone and challenging the Eurosystem, which has stepped up its bond purchases.  The US 10-year yield is around 1.65%, roughly a two-week high and back above the 20-day moving average. 

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