Forex Analysis
Central European Daily
The CNB springs no surprise and speaks of a later exit Lower inflation, higher growth, a later departure from the exchange rate regime,
FX Daily
We have a very light data calendar with only secondary data releases scheduled. InEurope both the UK and Italy will release industrial production for March.
FI Eye-Opener: Say hello to negative rates
The dovish message delivered by Mr Draghi pushed down rates in the Euro area. The German 10-year Bund yield edged lower to 1.45%. Short rates came down substantially.
AUD/USD Analysis
Aussie opened at $0.9375 this morning in Sydney, after a $0.9371 to $0.9394 range in the US last night. Aussie-dollar encountered early weakness as the US dollar started the day on a slightly firmer footing vs the euro.
RBA Statement on Monetary Policy – May 2014
The RBA’s neutral policy stance was reaffirmed in the May Statement on Monetary Policy (SMP). The RBA see the currentaccommodative monetary policy setting to continue “for some time yet”.
EUR/USD Analysis
The pair continued to feel the effects of overnight remarks by ECB President Draghi this morning in Asia but losses have been contained as the weekend approaches.
GBP/USD Analysis
The pair closed in NY Thursday at $1.6932 after rate had been pulled back off session highs of $1.6975 to $1.6924 as it reluctantly tracked euro-dollar’s sharp reversal lower
USD/JPY Analysis
The pair saw a relatively muted session this morning after it opened at Y101.68 vs the dollar and Y140.70 vs the euro. Dollar-yen edged marginally lower in initial dealings, touching Y101.59 and then rebounding to Y101.68.
ECB Draghi Successful So Far In Jawboning Euro lower
European Central Bank President Mario Draghi could certainly pat himself on the back Thursday, given that his comments about the high level of the euro had the desired effect of moving the euro lower.
RBNZ Spencer: NZD, Housing Key to Timing, Pace of Rate Hikes
Housing market pressures and the exchange rate are important variables on which the pace and timing of interest rate hikes will depend, Reserve Bank of New Zealand’s Deputy Governor Grant Spencer said Friday.
ECB promises to cut in June
The ECB abstained from easing today but Draghi was very dovish and said “the Governing Council is comfortable with acting in June”. Hence we expect both a deposit and refi rate cut of 10bp in June.
ECB: “We feel comfortable with acting next time”
Soft words, no cuts this time – as expected. But judging from what Draghi said, we feel that the probability for action at the next meeting is now above 50%.