Notwithstanding incredibly perilous financial circumstances, the Rajoy government deserves credit for its determination to attempt to steady the Spanish ship. 了解更多
One of the more memorable descriptions often applied to trading the Aussie dollar is that it invariably climbs the stairs but then plummets down the elevator shaft. Certainly the price action witnessed over the past six weeks or so is consistent with this depiction. After last month’s arm-wrestle which saw the AUD reach almost 1.05, the currency has been constantly on the back-foot over the past three weeks, falling through 0.98 to a 5mth low in early London trading before some consolidation and profit-taking by successful shorts ahead of the weekend. 了解更多
There’s something of a disconnect evident in markets this morning. Whilst stocks are down once again (for the 5th consecutive day), FX markets are staging a modest comeback although, in comparison to the overnight moves we’ve seen on the likes of the Aussie, it’s something of a dead-cat bounce for them. EUR/USD remains precipitously close to the lows of the year around the 1.2724 level, but has yet to really fall out of bed, certainly compared to some of the moves we’ve seen in emerging currencies and the aforementioned higher-yielding dollar bloc. 了解更多
As is so often the case, it is usually an accelerated flow of money in a particular direction that forces the hand of policy-makers and elected officials. 了解更多
The data on Q1 gold demand from the World Gold Council - although a little dated - makes for interesting reading nevertheless, especially in light of the latest price developments. It’s the official sector purchases that are of most interest, given that these tend to be more volatile than the more stable investment and jewellery demand, which is driven primarily by India and China. 了解更多
Notwithstanding the more reassuring recovery signs evident thus far in 2012, asset markets are far too complacent regarding the need for additional monetary accommodation from the Fed in the second half of this year.
Firstly, there is the deepening crisis in the eurozone which is permeating through Asia and dampening demand for US products. The most recent FOMC Minutes for the April 24-25 meeting cited Europe as one of the major risks for the US economic outlook. 了解更多
With the dollar making all of the running over recent weeks, it has been interesting to observe just how much pressure the currencies of the BRIC economies have been under. Elsewhere, we have remarked upon the recent decline in the Chinese yuan, a function of domestic financial weakness and accelerated capital outflow. The Brazilian real has been hit hard as well, down 4.4% for the month to date, while the Russian ruble has dropped 5%. 了解更多
Overnight the Chinese currency has continued to lose ground against the dollar, with yuan forwards declining to a four-month low. The explanation for the continuing softness in the renminbi is twofold – the dollar is in high demand at a time of enormous uncertainty over Europe’s future, and domestic economic conditions in China have been much weaker than expected. Twelve month NDFs are trading at a 1% discount to the onshore spot rate, which implies that the forward market expects a depreciation of the yuan over the next year. 了解更多
After a two-month respite from financial turmoil at the start of this year, Italy unfortunately is back in intensive care. The 10yr yield touched 6.0% this morning for the first time since early March; in the past two months the yield has risen by 130bp. Certainly, the very problematic situation in Greece is not helping – bond yields for all of Europe’s fiscal miscreants are climbing sharply at present. 了解更多
With the bulk of Europe in recession and China clearly slowing more rapidly than anticipated, it is no surprise to see commodity prices under sustained downward pressure. 了解更多
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