Forex Blog

April 17, 2014

Turkish Central Bank Optimistic On Economic Growth

Turkish economic growth will fall just short of the central bank’s 4 percent target this year and inflation will peak in May, governor Erdem Basci said on Thursday, giving an upbeat view of the economy a week before a rate-setting meeting.

Basci told the bank’s annual general assembly that he saw no need for Turkey to lower its growth target for this year despite the World Bank and International Monetary Fund’s recent cuts to their outlooks for the country.

His views on growth and inflation, which he said would remain “well above” the bank’s 5 percent target this year, were more optimistic than the market consensus, suggesting to some that he was paving the way for looser monetary policy – albeit not outright rate cuts – in the months ahead.

The bank meets to set interest rates next Thursday.

“The central bank appears to be hedging its bets, mulling a loosening of policy but clearly conscious of the risks of a premature cut in interest rates,” said William Jackson, emerging markets economist at Capital Economics in London.

via Reuters

The post Turkish Central Bank Optimistic On Economic Growth appeared first on MarketPulse.

April 16, 2014

CAD Lower As Central Bank Maintains Neutral Bias

The Canadian dollar touched its lowest point in over a week after the Bank of Canada maintained a neutral bias on interest rates and said a forecast pickup in business investment has been slow to materialize.

The currency fell against most of its major peers as the central bank held its benchmark interest rate at 1 percent for the 29th straight policy meeting, as forecast by all 18 economists in a Bloomberg News survey. The economy’s recovery “hinges critically” on a shift in demand from indebted consumers to exports and business investment, which will be aided by a weaker Canadian dollar and rising U.S. orders, the bank said in a statement today.

“The Bank of Canada statement was neutral, but I’d say it tilts towards the dovish, and I think a lower Canadian dollar is certainly an appropriate take from this statement,” said David Watt, chief economist at the Canadian unit of HSBC Holdings Plc. “They are less confident about the export and business export rotation they’ve talked about.”

The loonie, as the Canadian dollar is known for the image of the aquatic bird on the C$1 coin, depreciated as much as 0.4 percent to C$1.1024 per U.S. dollar, the weakest since April 4, before trading at C$1.1007 at 11:19 a.m. in Toronto, down 0.3 percent. One loonie buys 90.85 U.S. cents.

The Canadian dollar has been the worst-performing of the greenback’s 16 major peers this year as shifts in the Bank of Canada’s outlook prompted bets it would signal a need for easier monetary policy to spur inflation and boost exports.

via Bloomberg

The post CAD Lower As Central Bank Maintains Neutral Bias appeared first on MarketPulse.

Japan-US Resume TPP Talks Before Abe US Visit

Trade officials from Japan and the United States resumed talks Tuesday on the thorny issue of tariffs on agricultural produce in the prolonged Trans-Pacific Partnership free trade negotiations.

The discussions are to prepare for bilateral ministerial negotiations on the U.S.-led TPP which a Japanese official said may start Wednesday in Washington in a last-ditch effort to make progress ahead of U.S. President Barack Obama’s visit to Japan next week.

“We’re climbing the mountain little by little” even though a big gap remains, Hiroshi Oe, Japan’s deputy chief TPP negotiator, told reporters following a meeting with Wendy Cutler, acting deputy U.S. trade representative.

The focus in the ongoing negotiations is whether the United States can accept Japan’s desire to keep tariffs on beef and pork as well as four other sensitive farm product categories as an exception under the 12-country TPP.

Based on the outcome of Tuesday’s meeting, Akira Amari, Japanese minister in charge of the TPP, and Michael Froman, U.S. trade representative, will hold talks in the U.S. capital, Oe said.

Oe said the April 24 summit between Japanese Prime Minister Shinzo Abe and Obama in Tokyo should not be regarded as a deadline, but that the two sides have “been holding negotiations in a more intensive manner” based on the leaders’ agreement last month to speed up bilateral TPP talks.

Japan and the United States, the two largest economies in the envisioned TPP pact, have been at odds over tariffs on farm produce and the U.S. call for more access to the Japanese automotive market by lifting nontariff barriers.

The gaps between the countries have been a stumbling block for concluding the deal.

Japan agreed with Australia, another of the 12 TPP negotiating countries, to reduce its tariffs on Australian beef in steps under a bilateral free trade pact in a summit in Tokyo earlier this month.

The other TPP negotiators are Brunei, Canada, Chile, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.

via Mainichi

The post Japan-US Resume TPP Talks Before Abe US Visit appeared first on MarketPulse.

Oil Higher After Ukraine Begins Offensive

Brent crude climbed to $110 a barrel for the first time in six weeks amid concern that the crisis in Ukraine is escalating. West Texas Intermediate advanced before weekly U.S. inventory data.

Futures gained as much as 0.8 percent in London. Ukraine began an offensive against separatists in its restive east, recapturing an airport amid claims that Russian special forces were supporting anti-government groups. U.S. gasoline inventories are predicted to have slid by 1.75 million barrels, extending seven weeks of decreases, according to a Bloomberg survey before government data.

“Oil is being driven more by the Ukraine situation,” Guy Wolf, global head of market analytics at Marex Spectron Group in London, said by e-mail. “Does this situation mean more intense disagreements elsewhere, as in the Cold War? In a tight market, such as WTI, anything can have an amplified effect.”

Brent for June settlement rose 84 cents to $110.20 a barrel on the London-based ICE Futures Europe exchange, rising above $110 for the first time since March 4. The volume of all futures traded was about 12 percent above the 100-day average. Prices fell 0.6 percent this year.

WTI for May delivery gained as much as $1.24 to $104.99 a barrel in electronic trading on the New York Mercantile Exchange, the highest since March 3. The U.S. benchmark grade’s discount to Brent for the same month widened to $6.37 a barrel, the most since April 1 on an intraday basis.

via Bloomberg

The post Oil Higher After Ukraine Begins Offensive appeared first on MarketPulse.

April 10, 2014

German Central Banker Reaffirms Deflations Risks Limited

The European Central Bank (ECB) reaffirmed that it is ready to use “unconventional instruments” if euro zone inflation remains stubbornly low, but also said the expectation is inflation will gradually rise over the future.

Bundesbank chief Jens Weidmann, who is also a member of the ECB’s governing council, played down any risk of deflation, putting the slowing price growth currently witnessed down to factors “outside” the ECB’s control.

“Mario Draghi made this point pretty clear in his last press conference. We do believe that the deflationary risks are pretty limited so we portray an outlook for the inflation rates that expects a gradual recovery and this recovery will also be reflected in gradually rising inflation rates,” Weidmann told CNBC.

“The governing council said if there is a too prolonged period of low inflation rates it will also consider unconventional instruments,” he said.

Hawkish Weidmann, who as president of Germany’s central bank sits on the ECB’s 24-member Governing Council, refused to go into detail on what kind of measures the bank would take in the event of prolonged low euro zone inflation and added the bank also needed to consider the limits of it mandate.

via CNBC

The post German Central Banker Reaffirms Deflations Risks Limited appeared first on MarketPulse.

Pound Loses Ground After BoE Holds Rates

UK interest rates have been held at their record low of 0.5% for another month by the Bank of England.

The Bank also kept the size of its bond-buying stimulus programme unchanged at £375bn.

No changes had been expected to either rates or the bond-buying measure, despite recent evidence that the UK economy is continuing to recover.

Most economists do not expect the Bank to increase interest rates until the first half of next year.

The recent fall in the rate of inflation has also reduced any pressure on the Bank’s monetary policy committee (MPC) to raise rates. The UK’s inflation rate fell to 1.7% last month, which was a four-year low and below the Bank’s target of 2%.

Investec chief economist Philip Shaw said: “For now, with the economy growing respectably but not roaring away, we see it likelier than not that the MPC will avoid tightening policy this year, especially with inflation expected to remain below target over the medium term.”

Howard Archer, chief UK and European economist at IHS Global Insight, said: “The second quarter of 2015 currently looks the prime candidate for when the Bank of England starts to inch interest rates up – given both the inflation forecasts contained in the Bank of England’s February Quarterly Inflation Report and the general drift of comments made by MPC members in recent weeks.”

via BBC

The post Pound Loses Ground After BoE Holds Rates appeared first on MarketPulse.

March 28, 2014

Dovish BoC and Less Dovish Fed Bring CAD Down

The Fed has been cutting back on those purchases, a key element of stimulus that had kept long-term rates low, and said Wednesday it would further taper purchases by another US$10 billion a month to $55 billion.

Putting added pressure on the loonie were comments earlier in the week by the governor of the Bank of Canada that interest rate hikes in Canada could be further away than thought.

Stephen Poloz said that slower than normal growth may be the new norm. And he said those conditions will require central bankers to keep interest rates low for longer than they would have in the past. And, he added that a rate cut by the Bank of Canada could not be ruled out.

“The combination of a more dovish Governor Poloz and a less dovish Chair Yellen is a powerful near-term negative weight for the Canadian dollar,” said Camilla Sutton, chief FX strategist for Scotiabank.

via Financial Post

The post Dovish BoC and Less Dovish Fed Bring CAD Down appeared first on MarketPulse.

March 26, 2014

Chinese Banks Forced to “Show Them The Money”

Filed under: OANDA News — Tags: , , , , , , , — admin @ 2:31 pm

Rural banks in China’s eastern city of Yancheng stacked piles of cash in plain view behind teller windows to calm depositors queuing at bank branches for a third straight day on Wednesday following rumors that they had run out of cash.

According to residents of Sheyang county, which includes Yancheng, panic began on Monday with a rumor that a branch of one local bank turned down a customer’s request for a 200,000 yuan withdrawal. Banks declined to comment and Reuters was unable to verify the rumor.

The affected institutions are tiny compared with the scale of China’s financial sector, and the rush for cash appears to be an isolated incident so far. Rumors also found especially fertile ground there after a failure of less-regulated three rural credit co-operatives last January.

Yet the news caught nationwide attention, reflecting growing public anxiety as regulators signal greater tolerance for credit defaults.

Miao Dongmei, who runs a baby supply store opposite the branch of the Jiangsu Sheyang Rural Commercial Bank first targeted by depositors said she kept money at the bank, but did not join the stampede.

However, she said she had seen other customers carrying baskets full of cash out of the bank branch, while armored cars kept pulling up to deliver fresh loads of currency.

Sheyang bank employees told Reuters that some branches had been open 24 hours over the past two days.

via Reuters

The post Chinese Banks Forced to “Show Them The Money” appeared first on MarketPulse.

Fed To Release Approved US Bank Shareholder Payouts

U.S. banks will tell shareholders on Wednesday how much they plan to pay out after the U.S. Federal Reserve unveils whether they can afford the cost and still be robust enough to weather the next crisis.

It is part of a two-step annual regulatory check-up of the health of the largest U.S. banks. Last week, the Fed said that all but one of 30 banks had passed a model run of a simulated crisis similar to 2007-09 credit meltdown.

The exercise, in which banks had to show how they would cope with a halving of the stock market, is an increasingly important benchmark for the Fed to make banks safer and have them rely less on borrowing to fund their business.

All of the banks except Zions Bancorp stayed above the five percent threshold for the top-tier capital requirement. However, that does not automatically mean that the Fed has approved their shareholder pay-outs.

In its review, the Fed assumed banks would keep dividends at current levels and not buy back shares, setting off several days of speculation about whether banks with low capital ratios would be allowed to increase dividends.

Now, the Fed will say whether it has given its blessing to the banks’ actual capital return plans. The process is spread over a week to give banks a few days to adjust their plans if the Fed doesn’t approve them.

via Reuters

The post Fed To Release Approved US Bank Shareholder Payouts appeared first on MarketPulse.

March 18, 2014

Goldman Warns About Chinese Commodity Financing

inancing arrangments in China using commodities from copper to rubber as collateral to obtain credit may be unwound in 12 to 24 months, driven by increased yuan volatility, Goldman Sachs Group Inc. said.

As much as 1 million metric tons of copper and 30 million tons of iron ore could be released if the deals unwind, the bank said in a report today. The unwinding would be bearish “given relatively limited physical liquidity to absorb the shock,” analysts led by Jeffrey Currie wrote. For now, the deals remain profitable and an “abrupt government crackdown” on them is unlikely given the potential effect on the country’s economic growth, they wrote.

“Our view is that Chinese commodity financing deals will gradually unwind over the medium term, driven by an increase in foreign exchange hedging costs, which would slowly erode financing deal profitability and eventually close the interest rate arbitrage,” the analysts wrote.

The transactions using commodities as collateral made as much as $160 billion, or 31 percent of China’s total short-term foreign-exchange loans, the report showed. Gold, copper and iron ore are most commonly used as collateral, followed by soybeans, palm oil, rubber, nickel, zinc and aluminum, the bank said.

via Bloomberg

The post Goldman Warns About Chinese Commodity Financing appeared first on MarketPulse.

Older Posts »

Powered by Efacilitators Hosting