Currency markets show some calm ahead of interest rate decisions
Yesterday showed signs of stability with regards to the Yen indicating some easing in the recent volatile foreign exchange market after significant carry trades were unwound last week.
Noises from Tokyo are indicating that Japanese retail and institutional investors have been defying fears of the unwinding of the carry trade and continuing to place money overseas. These outflows could be part of the reason as to why the Yen has stopped appreciating over the last day.
The carry trade which is the practice of borrowing in low yielding assets, such as the yen, to buy higher-yielding assets has been the main topic across all markets in recent weeks but the extent to which remaining positions will have a significant impact on the market are of much debate among analysts.
Markets today will play close attention to the comments made by Jean-Claude Trichet (13.30 GMT) for insight into the ECB’s future monetary policy given that a hike of 25 basis points has already been factored in.
Should the raise occur, this will take European interest rates to a five and a half year high of 3.75 percent.
The Bank of England also make their rate announcement at midday today with the general consensus that rates will remain on hold. If this is the case, focus will turn to the minutes of the meeting in order to ascertain further direction of UK monetary policy.
As expected, the Reserve Bank of New Zealand lifted rates to 7.5 percent today which has seen a currency increase of over half a percent against the US Dollar currently trading around 0.6821.
The contents of this blog are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. The Wise Money Blog cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.
Noises from Tokyo are indicating that Japanese retail and institutional investors have been defying fears of the unwinding of the carry trade and continuing to place money overseas. These outflows could be part of the reason as to why the Yen has stopped appreciating over the last day.
The carry trade which is the practice of borrowing in low yielding assets, such as the yen, to buy higher-yielding assets has been the main topic across all markets in recent weeks but the extent to which remaining positions will have a significant impact on the market are of much debate among analysts.
Markets today will play close attention to the comments made by Jean-Claude Trichet (13.30 GMT) for insight into the ECB’s future monetary policy given that a hike of 25 basis points has already been factored in.
Should the raise occur, this will take European interest rates to a five and a half year high of 3.75 percent.
The Bank of England also make their rate announcement at midday today with the general consensus that rates will remain on hold. If this is the case, focus will turn to the minutes of the meeting in order to ascertain further direction of UK monetary policy.
As expected, the Reserve Bank of New Zealand lifted rates to 7.5 percent today which has seen a currency increase of over half a percent against the US Dollar currently trading around 0.6821.
The contents of this blog are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. The Wise Money Blog cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.
Labels: Bank of England, carry trade, Reserve Bank of New Zealand, Yen
posted by Drs Search @ 2:05 PM
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