The excitement was running high ahead of yesterday’s FOMC meeting in anticipation of some sort of dovish action from the Federal Reserve. And they didn’t disappoint as they left rates unchanged and more importantly declared that principal repayments from mortgage-backed securities will be used to buy longer-term treasuries. This was
With confirmation that the Federal Reserve will resume government bond purchases and a scent that the Bank of England might do the same, yield curves have shifter lower midweek as investors force race along the maturity horizon, locking into what we all thought were already ultra-low yields. The dollar’s response
The U.S. trade deficit hit -$49.9 billion in June, which was much wider than market expectations for a -$42.3 billion shortfall. May’s deficit was revised down slightly to -$42.0 from the initially reported -$42.3 billion. The deterioration in the trade balance in the month reflected a solid $5.9 billion (3.0%)
Canada’s June merchandise trade balance deteriorated more than expected with the deficit rising to $1.1 billion from an upwardly revised $0.7 billion deficit in May (originally reported as a $0.5 billion deficit). Market expectations had been for an improvement in the deficit to $0.3 billion. The deterioration in June reflected
It appears that currency traders are twisting the Fed’s words out of shape having fully digested the latest policy statement and creating a sudden reversal in demand for dollars. The FOMC didn’t really tell the market anything new and although they haven’t necessarily caved in to pressure building since the
Asia Pacific markets were lower after a late day rally was unable to bring US equities out of the red. The Hang Seng and the S&P/ASX 200 indices were lower by .8% and 1.9% respectively, while the Shanghai SE composite eked out a gain of nearly .5% after a flurry
Risk aversion sentiment helped to push the USD and JPY currencies higher and at their best levels against the European pairs ahead of the NY morning in the post FOMC decision environment. The combination of the Fed downgrade of the US economic assessment and China new Yuan loan data painted
BoE’s inflation report assured that the British economy continue on walking towards full recovery, where the economy expanded during the first six months of this year close to the historic average rate, but still below the peak that was witnessed before the crisis began. Bank of England expects that inflation
European stock market retreated by the start of Wednesday’s trading session, after the Fed announced that economic recovery is likely to be ‘More Modest’ than expected, thus, spreading fears among investors about the global recovery process especially after China’s growth rates retreated along with Europe’s debt problems.
The key takeaway for yesterday’s FOMC meeting was that Fed members seemed less confident about the US recovery. The erosion in their optimism spread quickly to weigh on risk-correlated trades and further contracted US yields. Interestingly, the knee-jerk reaction in the Forex Market was the buying of the EURUSD. The
