Bank of England Maintains Interest Rates at 5.25%, Inflation Not Tamed Quickly Enough

The Bank of England MPC at its December meeting Thursday kept the key bank rate at 5.25% as expected in a 6–3 split vote. The bank left guidance on time spent at the peak unchanged, effectively leaving the door left equally open to another hike if needed. In that outlook recent jobs and inflation data were largely discounted by the BoE. There isa clear hesitation on whether declaring inflation being tamed quickly enough that they can soften language on the … Continue reading “Bank of England Maintains Interest Rates at 5.25%, Inflation Not Tamed Quickly Enough”

Bank of England Maintains Interest Rates at 5.25%, Emphasis on Cuts a Long Way Off

The Bank of England MPC at its November meeting Thursday kept the key bank rate at 5.25% as expected in a 6–3 split vote, and respectively lower and higher GDP growth and inflation forecasts. Changes to the key sections of the statement were minor. The only exception the BoE noting that their new forecasts suggest “policy is likely to need to be restrictive for an extended period of time.” This is supported by the BoE’s projections that see inflation only … Continue reading “Bank of England Maintains Interest Rates at 5.25%, Emphasis on Cuts a Long Way Off”

Bank of England Maintains Interest Rates at 5.25%, Higher for Longer, Increases QT Pace

The Bank of England MPC at its September meeting Thursday keeping the key bank rate at 5.25% which was unexpected by many despite recent lower inflation in the UK. Until today there had been 14 consecutive rate hikes and BoE’s benchmark rate puts the cost of borrowing at the highest level since late-2008. The BOE vote was 4-5 vs 8-1 expected (Bailey, Broadbent, Dhingra, Pill, Ramsden vote to hold). The bank unanimously deciding to increase the pace of reducing holdings of … Continue reading “Bank of England Maintains Interest Rates at 5.25%, Higher for Longer, Increases QT Pace”

Forex Traders Weekly Outlook – The Aussie Bounces with Oil, Copper and Iron Ore

The Australian Dollar was the best performer of the week, buoyed by improving sentiment in commodities, iron ore hit a five-week high and oil prices YTD highs with hopes for a Chinese economy rebound. The New Zealand Dollar pulled along with it. The US dollar rally was tested this week and ultimately again benefiting from safe haven and yield chasing flows proved its resilience after rebuffing earlier selling. The Dollar Index bounced off 102.84 to close the week at 104.23. … Continue reading “Forex Traders Weekly Outlook – The Aussie Bounces with Oil, Copper and Iron Ore”

Forex Traders Weekly Outlook – US Dollar and Swiss Franc Attracting Safe Haven Flows

The US dollar rally continued again this week benefiting from safe haven and yield chasing flows. 10-year Treasury yields underpinning yen pairs with carry trade impact. Fed Chair Jerome Powell’s remarks at Jackson Hole renewed commitment to combating inflation prompted traders to elevate their expectations for another rate hike within the year. The yen fell to ¥146.6 per dollar after Jay Powell’s speech at one point. That was the lowest level against the dollar since November on Friday, pressuring the … Continue reading “Forex Traders Weekly Outlook – US Dollar and Swiss Franc Attracting Safe Haven Flows”

Forex Traders Weekly Outlook – Weak China Pressures Yen & Commodity Currencies Further

The US dollar rally continued again this week benefiting from safe haven and yield chasing flows. 10-year Treasury yields underpinning yen pairs with carry trade impact. The move higher in US yields again sees “risk off” extended to the emerging markets. EM currencies again under pressure with global risk aversion. We see the folly of BRICs and BRIC wannabes as the Turkish Lira hits another all-time low and the imploding Chinese recovery impacts the Yuan. The only currency the US … Continue reading “Forex Traders Weekly Outlook – Weak China Pressures Yen & Commodity Currencies Further”

Forex Traders Weekly Outlook – Higher Yields Pressure Yen & Emerging Currencies

The US dollar rallied, benefiting from safe haven and yield chasing flows. Treasury yields finished near the highs of Friday and not far from last week’s highs as curve steepeners continued on hopes for a soft landing with PPI slightly higher but CPI lower than forecasts. The move higher in US yields again sees “risk off” extended to the emerging markets. EM currencies quickly under pressure with global risk aversion. We see the folly of BRICs and BRIC wannabes as … Continue reading “Forex Traders Weekly Outlook – Higher Yields Pressure Yen & Emerging Currencies”

Forex Traders Weekly Outlook – Rating Change Crossfire Hit Emerging Markets Hardest

Many catalysts for the foreign exchange markets with the Bank of England, Reserve Bank of Australia and Bank of Japan JGB moves and the larger than expected US treasury funding program. Throw into the mix rating agency Fitch downgraded the United States of America’s Long-Term Foreign-Currency Issuer Default Rating (IDR) to ‘AA+’ from ‘AAA’ on Tuesday. Following the increased funding needs and Firch downgrade the move higher in US yields saw “risk off” extended to the emerging markets. EM currencies … Continue reading “Forex Traders Weekly Outlook – Rating Change Crossfire Hit Emerging Markets Hardest”

Bank of England Raises Interest Rates to 15-year High 5.25%, Monetary Policy Restrictive

The Bank of England MPC at its July meeting Thursday raised the key bank rate by raised by 25 bps to 5.25% as expected, there was some clamoring for a 50bps hike. It was the 14th consecutive rate hike and BoE’s benchmark rate puts the cost of borrowing at the highest level since late-2008. The vote was 8-1 vs 7-2 expected (Dhingra dissented, Haskel and Mann voted for 50 bps). The bank risks pushing the UK into a brutal recession in … Continue reading “Bank of England Raises Interest Rates to 15-year High 5.25%, Monetary Policy Restrictive”

Forex Traders Weekly Outlook – Yen Gone Wild, Eyes on RBA & BOE impact on Pound & Aussie

The focus in foreign exchange this week was the yen, with the Bank of Japan tinkering with the YCC increasing volatility in the USDJPY and the yen crosses. While the soft widening of the YCC initially saw the yen rally the dollar benefits from strong US data. Keeping it in perspective the two key pillars of the US dollar’s rally since it climbed from early 2021 have been growth and interest rate differentials. The curve that impacts forward swaps also … Continue reading “Forex Traders Weekly Outlook – Yen Gone Wild, Eyes on RBA & BOE impact on Pound & Aussie”