Archive | February, 2013

Inflation poses no problems in the Eurozone

28 Feb

Ben Bernanke clarified his position as a response to the insistence of some Congressman (mostly Republicans): a strategy for normalizing monetary policy (printing press is not exactly the usual procedure) is not in the eyes of officials. Furthermore, when it will be decide to raise interest rates or extract liquidity, the announcement will be made in advance. ECB President Mario Draghi did not want to create a dissonance, and in a speech on Wednesday said that there is no rush to withdraw monetary stimulus. One of the arguments the low inflation rate which is gonna fall below target is supported by recent data: Eurozone consumer prices rose 2% in the last year, and without food and energy, alcohol and tobacco, their level is about  1.3% higher.


U.S. economy avoids decreasing to the limit

28 Feb

The good news: U.S. economy has not declined in the fourth quarter. The bad news: increase is only of 0.1%. At a closer look, due to a fresh information in statistics, 0.2 points performance is due to a favorable commerce trade than initially considered. However, the economy grew by 2.2% in 2012. Capital markets have specific shyness while approaching to record peaks however not decide to step back.

Recovery in the labor market

Applications for unemployment benefits dropped to 344,000 last week, with 22,000 fewer than in the week ended on February 16. A year ago the figure was 373 000. The labor market continued signaling a gradual healing that will put Fed at some point in the face of a difficult choice regarding on when to withdraw monetary injections. Activity in the Chicago region accelerates market optimism.

Eur/Nzd is a bull

20 Feb

The Reserve Bank of New Zealand Governor Wheeler stated that the NZD is overvalued in his address to the press Today, stating that he is willing to intervene to bring NZD lower if needed. This is a surprising dovish turn from what we’ve been hearing this week. Prime Minister Keys and Finance Minister English have came on record to publicly support a stronger NZD, stating the benefits a strong NZD brings for consumers as import costs decrease. This, together from the hawkish RBNZ statement earlier this month assured traders and speculators alike that a rate cut is not even on the table for discussion. Now, Wheeler has done a 180 degrees turn around and say that he is willing to use the benchmark rate as a tool to lower NZD, essentially alluding to a rate cut down the road. Interestingly, there are unconfirmed reports that RBNZ has been participating in market intervention by selling NZD/USD above 0.845 for the past few months, so it seems that RBNZ was never truly comfortable with a high NZD, and it is only the failure of keeping NZD down that Wheeler has been forced to suggest rate cuts.


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British economy still needs help

20 Feb

Vote to preserve assets at 375 billion pounds: 6 for, 3 against

UK central bank governor has made no secret of his desire to reopen the printing press last week. His opinion was actually translated into action at the recent meeting on monetary policy issues. Minutes released Wednesday showed three votes to restart the printing press, among which that of Mervyn King, bringing another 25 billion pounds in sistem.Discussions where focused on interest cut  or a form of monetary stimulus more focused than QE injection . A surprise that withdrew the fragile support that pound had against the dollar. By installing the new governor, King seems to have time to argue for another round of QE, while inflation seems a problem that haad been moved to the edge of the radar.

Unemployment rises to 7.8%, but other news from the labor market are better: with 12,000 fewer applications for financial support. Resistance in this segment needs to leave a clear trend of improvement before allowing monetary policy changes. Markets seem to understand this, the pound has lost almost 1% against the dollar after the publication of relevant information.


G20 vows to avoid currency war

18 Feb

4exanalysisA single country can win for a while the devaluing commercial advantages. This operation makes imports more expensive and favors the local domestic products. On the other hand, exporters get higher profits when they change back to local currency the international revenue. But this brings prosperity measure only temporary, illusory, when trading partners respond with custom barriers or similar policies to depreciate the currency Continue reading

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