Tag Archive: Norges Bank
BOJ Speculation Unwound, Taking the Yen Lower
Overview: The busy week of central bank meetings is
off to a mostly slow start. The dollar is narrowly mixed in quiet turnover,
except against the Japanese yen. Many participants seemed to exaggerate the
risks of a BOJ move next week and dollar continued its recovery that began
ahead of the weekend. Among emerging market currencies, central European
currencies appear to be aided by the firmer euro. They are resisting the
dollar's advance seen...
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Dollar Extends Losses Post-FOMC
Overview: We suspect that if Martians read the FOMC
statement, which was nearly identical to the September statement and listened
to Chair Powell, they would conclude there was nothing new. Yet, the market
habitually hears Powell as dovish and this has weighed on rates and the dollar,
while lifting risk appetites. Follow-through selling of the greenback has
dragged it lower against all the major currencies, with the Antipodean leading
the way, and...
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Higher for Longer Lifts the Dollar, while SNB Surprises Many by Standing Pat–Over to the BOE
Overview: The Federal Reserve's hawkish hold, which
included 50 bp less of cuts next year than it had signaled in June, has lifted
the dollar against most currencies today. The notable exception is the Japanese
yen. The greenback did extend its advance to new highs for the year before the
market turned cautious ahead of the outcome of the Bank of Japan meeting
tomorrow. The Swiss franc is the weakest of the G10 currencies after the Swiss
National...
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Week Ahead: Thumbnail Sketch of Central Bank Meetings
The
week ahead is dominated by central bank meetings. Six of the G10 central banks
meets. The post-Covid monetary tightening cycle is ending. The start was not
synchronized, and neither will be end. It is tempting to think that those that
began the tightening cycle early will among the first to finish. Among emerging
markets that is true for Brazil and Chile, both of whom have begun cutting
rates. And Brazil is likely to deliver the second cut in...
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Higher for Longer
Overview: The central
banks of Norway and Switzerland have hiked rates by 50 bp and 25 bp,
respectively. Attention is on the Bank of England. A 25 bp hike is widely
expected but after strong inflation report, the risk is clearly for a 50 bp
hike. In fact, we suspect a quarter-point move could see sterling sold. With a
new orthodox economics team in Turkey, a large rate hike is expected today. Late
in the North American session, Mexico's central...
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The Greenback Recovers After the Initial Post-Fed Wobble
Overview: The US dollar has come back bid after losing ground against
most currencies as the markets reacted to the FOMC decision and press
conference. The Antipodeans and Scandis have been tagged the hardest, illustrating
the risk-off mood, and arguably the weakening growth prospects. Countries that
peg their currencies to the dollar have hiked rates, as has the Philippines and
Taiwan. The Swiss National Bank and Norway have also lifted policy...
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Five G10 Central Banks Meet and US CPI on Tap
Half of the G10 central banks meet in the week ahead. The Fed is first on December 14, and the ECB, BOE, Swiss National Bank, and Norway's Norges Bank meet the following day. Before turning a thumbnail sketch of the central banks, let us look at the November US CPI, which will be reported as the Fed's two-day meeting gets underway on December 13.
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Fed’s Hawkishness Roils the Capital Markets
Overview: The Fed delivered the expected 75 bp
rate hike, and although it says it will take into account the cumulative effect
of past hikes and their lagged impact, the takeaway has been a hawkish message.
Risk appetites have evaporated. The dollar is stronger, while stocks and bonds
have been sold. Japan’s markets were spared due to the national holiday, but the
other large markets in the area were sold, lead by the 3% decline in the Hang
Seng....
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Putin and Powell Lift Dollar
Overview: Between Putin’s mobilization of 300k Russian troops and Fed
Chair Powell expected to lead the central bank to its third consecutive 75 bp
hike later today, the dollar rides high. It has recorded new two-year highs
against the dollar bloc and Chinese yuan, while sterling was sent to new lows
since 1985. Asia Pacific bourses were a sea of red for the sixth decline in the
regional benchmark in the past seven sessions. Surprisingly, Europe’s...
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The Greenback Firms to Start the New Week, Stocks Slide
Overview: The busy week is off to a slow
start as Japan is on holiday and the UK and Canadian markets are closed to
honor Queen (Australia will commemorate with a holiday on Thursday). Nevertheless,
the sell-off in equities continues and the US dollar is firm. Most of the large
markets in Asia fell. India is a notable exception. Its benchmark rose for the
first time in four sessions, helped by bank shares and Infosys. Europe’s Stoxx
600 is off for...
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Week Ahead: More Evidence US Consumption and Output are Expanding, and RBNZ and Norges Bank to Hike
After two-quarters of contraction, many still do not accept that the US economy is in a recession. Federal Reserve officials have pushed against it, as has Treasury Secretary Yellen. The nearly 530k rise in July nonfarm rolls, more than twice the median forecast in Bloomberg's survey, and a new cyclical low in unemployment (3.5%) lent credibility to their arguments. If Q3 data point to a growing economy, additional support will likely be...
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Johnson’s Ability to Lead Tories into Victory at Risk with Today’s By-Elections
Overview: Asia Pacific equities were mixed. Gains were recorded in China, Hong Kong, Australia, and India, among the large markets, while Japan was mostly flat and South Korea and Taiwan shares fell.
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Fed Unleashes Animal Spirits
Overview: The Fed's hawkish pivot came a few weeks before yesterday's FOMC meeting, which confirmed more or less what the market had already largely anticipated. Buy the (dollar) on rumors (of tapering and more aggressive stance on rates) and sell the fact unfolded, and unleashed the risk-appetites which rippled through the capital markets. US stocks rallied yesterday, and the futures point to a gap higher opening today. Large Asia Pacific...
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Central Bank Fest
Next week is the last big week of the year, and what a week it will be: Five major central banks meet and at least nine from emerging market countries. Norway's Norges Bank is the most likely major central bank to hike its key (deposit) rate (December 16). It would be the second hike of the year. The economy is enjoying a solid recovery, and headline inflation rose to 4.6% in November, its fastest pace since 2008. The underlying rate, which...
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The Week Ahead: Four Central Banks and the US Jobs Report
The Bank of England and the Federal Reserve meetings are the highlights of the week ahead. Usually, the US jobs report is the main feature of the beginning of a new month's high-frequency data cycle. However, the FOMC meeting two days earlier may take away some of its significance, even if it still possesses some headline risk. Two other major central banks meet in the first week of November. The Reserve Bank of Australia meets early on November...
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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, March 18: Dovish Fed but Yields Rise, Helping the Greenback Recover from Yesterday’s Slide
Overview: Asia Pacific equities mostly advanced after the US benchmarks recovered following the dovish FOMC. Australia, New Zealand, and India did not participate in today's gains. European bourses edged higher, but US shares are struggling, and the NASDAQ futures are off nearly 1%, threatening to end the three-day rally.
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FX Daily, August 20: FOMC Minutes Spur Profit-Taking
Overview: The FOMC minutes depicted a Federal Reserve that appeared to be not quite ready to take fresh initiatives, whether it is yield curve control or changing the composition or quantities of its bond purchases. This unleashed profit-taking on some of the large moves in equities, the dollar, and gold.
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FX Daily, May 7: China Reports an Unexpected Jump in Exports, While Norway Surprises with a Rate Cut
Overview: There is a sense of indecision in the air today. There have been several developments, but investors seem mostly reluctant to extend positions. China reported a surge in exports in April and an increase in the value of reserves. Australia reported a rise in exports in March. The Bank of England left policy steady, but clearly signaled it was prepared to boost its asset purchases.
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FX Weekly Preview: Central Bank Meetings Featured
The US dominated the news stream at the start of 2020. The spasm in the US-Iran confrontation has quickly subsided. The much-heralded US-China Phase 1 trade deal has been signed. The US has completed the ratification process of the US Mexico Canada Free-Trade Agreement. The early signs from the economic entrails suggest the world’s largest economy continue to enjoy a record-long, even if not robust, expansion.
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