The US dollar and yen are generally firm in what appears to be mostly a light bout of position squaring after a loss of downside momentum. This is true across the board, major and emerging market currencies.
It may be tempting to attribute the firmer dollar tone to heightened chances of tapering given the signs of a budget agreement. However, US 10- year bond yields are essentially unchanged on the news. Moreover, the budget still needs to be approved, and it is very likely to be modified in the process. In any event, the deal is not that far from what many economists had anticipated and there have been reports from Washington, suggesting a budget agreement was in the works.
Like other agreements seen in recent days, like at the WTO or on the resolution mechanism in Europe, the budget agreement is forged in compromise. The Republicans managed
In my view, market-based data are better indicators of what is going on beneath the economy's surface than official statistics. Market-based data are usually available in real-time, and they are derived from the interactions of millions of participants from all over the world - the wisdom of crowds distilled into one number. They aren't seasonally adjusted, and they aren't subject to revisions after the fact. But they do require some interpretation, so here is a collection of 10 market-based indicators that I'm paying attention to, and why. On balance, I think they all reveal a gradual improvement in the economic and financial fundamentals, but the persistence of a general aversion to risk.
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Gold and commodity prices tend to track each other over time, but gold is much more volatile (note that the range of the y-axis on the right is about twice the range of the same
More than five years after the onset of the Great Recession, consistent global growth remains elusive, prompting central banks to stick with artificially low interest rates while pumping an unprecedented infusion of cash into the financial system.
As they search for new ways to stimulate liquidity to augment the stimulus measures they’ve enacted, central bank policymakers must also fight deflation, and as expected, these are the themes that will continue to dominate the European Central Bank’s (ECB) train of thought as it has at the Bank of Japan (BoJ). Many foreign exchange (forex) participants and analysts are anticipating fiscal policy to be less of an impediment to U.S. growth in 2014. If so, it should allow the Federal Reserve to carefully navigate away from making asset purchases and reduce its massive $85-billion-a-month bond-buying program.
In 2013, the forex asset class managed to loiter within a contrived trading range policed by