Helpless Central Banks

16 June, 2016

From being the masters of markets in recent year, central banks are increasingly looking like the backroom boy; helpless against the uncertainties of the world. Once again, the world of BoJ Governor Kuroda involves him doing nothing and the yen rallying more than 2%. It also involves him doing something (as was the case end January) and the yen rallying. But the BoJ’s hands were largely tied, given that a fair degree of the latest strength has come from the risk aversion spreading through markets ahead of next week’s EU referendum vote. This could mean a chunk of yen strength either ends up being transitory, or being further enhanced. Only time will tell on that one. Of course, the story was slightly different for Yellen, with the recent indicators on the economy backing no change in rates. We also saw Governor George removing her previous vote for a hike, the anticipated hikes for this year reduced to two with the projections for 2017 also revised lower. This continues a familiar pattern of the Fed removing anticipated future tightening. Bond yields were lower as a result, the dollar softened and equities were weaker into the close.

The central bank theme continues with the meeting of the Bank of England at 11:00 GMT today. This will be a difficult one, because the EU Referendum will be the elephant sat squarely in the middle of the room. Can’t be ignored, but to acknowledge it will inevitably lead to being drawn into the debate itself. So there will be a very considered statement and some carefully worded minutes. Gold has pushed through the 1300 level overnight, into its seventh consecutive positive session, oil in its sixth day of straight declines. We’ve got another week to go of such risk aversion in markets. It’s going to be a long week…


Source link  
Beware Profit Takers

On Thursday US durable goods orders were released showing a 6.5% increase, which was the biggest gain in 3 years, resulting in USD clawing back some of its recent losses....

US Inflation Concerns Pressure USD

The Federal Reserve ended its 2-day meeting on Wednesday with, as expected, no change in US interest rates. The Fed commented that US inflation had declined...

No More Easy Money?

On Thursday, the US Commerce Department released GDP (Annualized QoQ) showing a 1.4% annual rate compared to the 1.2% posted in the previous month. This slight increase shows...


Markets listen to Yellen & Draghi

Central Banks are the key drivers of the markets this week as traders focused on comments made from two major central bankers ECB and Fed...

Markets look ahead to US data

Trading in USD was relatively flat on Friday ahead of economic indicators released next week in the US, which will provide...

Bear Territory for Oil?

Oil continued to trade lower on Thursday as traders look ready to test new lows for crude prices with worries persisting over a global glut...


USD Rises as Investor Concerns Abated

Investor concerns, that low US inflation could deter the Federal Reserve from raising interest rates further this year...

How will FOMC Affect USD?

The crucial US retail sales and inflation figures for May will be released at 13:30 BST today...

Different Election Outcomes

In terms of the UK general election, there are 650 seats in total in the House of Commons. To become a majorityþ..

  


Share: