Yesterday’s announcement by the Swiss National Bank that it would seek to maintain the currency at 1.20 Swiss francs to the euro resulted in a decline of more than 8 percent for the franc. In recent months, the Swiss currency has been in great demand as a “safe haven” resulting in an appreciation in the franc’s value that ultimately forced the central bank to intervene in an attempt to protect export sales.
“We will see a lot more intervention now, we will see manipulation on a grand scale,” said Stuart Thomson, at Ignis Asset Management in Glasgow. “Traditional safe havens are trying to undermine the value of their currencies.”
Source: Bloomberg
Following a disastrous first quarter in which the economy declined by 0.9 percent as floods and massive storms ravaged large parts of the country, Australia’s Gross Domestic Product Product (GDP) grew by 1.2 percent in the second quarter. Strong demand for Australia’s resources in the Asian markets boosted export sales and most observers feel this trend will continue.
As a result, consumer confidence is on the rise with retail sales for July gaining half a percent over June. This is the first increase in three months.
“The resilience of households was the stand-out factor,” said Brian Redican of Macquarie. “These are good numbers for the RBA and should quieten talk the economy is somehow falling apart.”
Source: BBC News
The Bank of Canada today announced that it is maintaining its target for the overnight rate at 1 per cent. The Bank Rate is correspondingly 1 1/4 per cent and the deposit rate is 3/4 per cent. The global economic outlook has deteriorated in recent weeks as several downside risks to the projection in the Bank’s July Monetary Policy Report (MPR) have been realized. The European sovereign debt crisis has intensified, a broad range of data has signalled slower global growth, and financial market volatility has increased sharply. Recent benchmark revisions show that the U.S. recession was deeper and its recovery has been shallower than previously reported. In combination with recent economic data, this implies that U.S. growth will be weaker than previously anticipated. The Bank expects that American household spending will be even more subdued in the face of high personal debt burdens, large declines in wealth and tough labour market conditions. Fiscal stimulus in the United States will also soon turn into material fiscal drag. Acute fiscal and financial strains in Europe have triggered a generalized retrenchment from risk-taking and could prompt more severe dislocations in global financial markets. Resolution of these strains will require additional significant initiatives by European authorities. Growth in emerging-market economies has been robust, although its rate and composition will be affected by weakness in major advanced economies. While commodity prices have declined owing to diminished global growth prospects, they remain relatively high.
Bank of Canada
As Federal Reserve members continue their two-day session at Jackson Hole, Wyoming, the Commerce Department released a revised growth figure for the U.S. economy for the second quarter. The revised figure shows the economy grew at an annualized rate of 1 percent for the three months ending in June compared to an earlier estimate of 1.3 percent. The worse-than-expected result will add pressure to Fed Chairman Ben Bernanke to announce further stimulus efforts.
Source: BBC News
The European Central Bank lifted its growth prediction for the eurozone region to between 1.4 and 1.8 percent for this year, and for between 0.5 and 2.3 percent for next year.
ECB President Jean-Claude Trichet said the eurozone recovery has been supported by global growth and reflected “temporary domestic factors”.
He added, however, that “uncertainty still prevails”.
“One the one hand, global trade may continue to perform more strongly than expected, thereby supporting euro area exports,” he said. “On the other hand, concerns remain relating to the emergence of renewed tensions in financial markets and to some uncertainty about growth prospects in other advanced economies.”
Source: BBC News
Taiwan recorded an annualized growth rate of 18 percent for the final three months of 2009. The level of growth was much greater than expected and can be attributed to a massive increase in demand in China for Taiwan’s high-tech products.
China’s economy also grew in the fourth quarter, expanding at an annualized rate of 10.9 percent and is on target to surpass Japan as the world’s second largest economy.
Source: BBC News
Statistics Canada announced today that retail sales in Canada rose in September for the seventh time in nine months, gaining a percent for a total of $34.9 billion ($32.6 billion USD). Six of the eight sectors realized gains but compared to September of last year, sales were down 3.3 percent.
The Canadian Press
