AFX NEWS BRIEFING: Macroeconomics highlights to 10:10 GMT
April 30, 2008 on 8:13 am | In Currency | No Comments
2007-03-02 10:00:03
Euro zone Jan PPI up 0.1 pct vs Dec, up 2.9 yr-on-yr
BRUSSELS (AFX) - Euro zone producer prices rose 0.1 pct in January from
December, and were up 2.9 pct year-on-year, EU statistics office Eurostat said.
2007-03-02 09:43:54
UK Feb construction sector PMI falls to 57.3 from 57.9 in Jan
LONDON (AFX) - UK construction sector growth slowed slightly in February,
with input price inflation touching an 18-month low, the Chartered Institute of
Purchasing and Supply said.
2007-03-02 09:37:33
Hungary slashes trade deficit in 2006
BUDAPEST AFX - Hungary slashed its trade deficit last year to 1.96 bln eur
from 2.9 bln eur in 2005, the central statistics bureau KSH reported.
2007-03-02 09:29:26
Hong Kong Feb Land Registry deals down 2.1 pct vs Jan in value terms
HONG KONG (XFN-ASIA) - Property transactions registered at Hong Kong’s Land
Registry in February stood at 26.6 bln hkd, down 2.1 pct from the preceding
month but up 60.8 pct from a year earlier, the agency said in a statement.
2007-03-02 09:05:06
China should launch anti-monopoly law soon - report
BEIJING (XFN-ASIA) - China should launch its anti-monopoly law as soon as
possible to boost reform of monopolized sectors, said a study published on the
website of Communist Party School.
2007-03-02 08:04:42
Spain Feb jobless down 0.3 pct vs Jan
MADRID (AFX) - The number of jobless decreased by 7,232 people, or 0.3 pct,
in February from January, the Labour Ministry said.
2007-03-02 02:35:22
Japan Jan employee average pay down 1.4 pct, overtime pay down 0.7 pct yr-on-yr
TOKYO (XFN-ASIA) - The average monthly cash earnings per regular employee in
Japan, including overtime and bonuses, was at 280,260 yen in January, down 1.4
pct from a year earlier, the Ministry of Health, Labor and Welfare said.
2007-03-02 01:00:06
Japan unemployment rate 4.0 pct in Jan vs revised 4.0 pct in Dec
TOKYO (XFN-ASIA) - The unemployment rate remained at 4.0 pct in January as
manufacturers and medical services continued to take on more workers to deal
with increased demand, data from the Ministry of Internal Affairs and
Communications show.
2007-03-02 00:45:21
Australia Jan retail sales rise 0.9 pct vs Dec
SYDNEY (XFN-ASIA) - Retail sales in January rose a seasonally adjusted 0.9
pct from December to 18.621 bln aud, the Australian Bureau of Statistics said.
2007-03-02 00:28:48
Japan Jan core CPI flat yr-on-yr, matching forecast
TOKYO (XFN-ASIA) - The core consumer price index, which excludes volatile
prices of fresh food but includes energy prices, was at 99.7 in January,
unchanged from a year earlier after seven straight months of increase, in line
with market expectations.
2007-03-02 00:06:37
Japan monetary base down 21.1 pct in Feb, down for 12th straight month
TOKYO (XFN-ASIA) - The monetary base in February was 21.1 pct lower than a
year before at 87.91 trln yen, down for the 12th straight month, preliminary
data from the Bank of Japan show.
2007-03-01 23:58:40
Manufacturing data calm investors
WASHINGTON (AP) - A better than expected performance from the U.S.
manufacturing sector in February helped calm investors on Thursday, even as
economists cautioned that one month’s worth of data is not a cause for too much
optimism.
2007-03-01 23:58:21
Japan Jan household spending up 0.6 pct yr-on-yr, 1st rise in 13 mths
TOKYO (XFN-ASIA) - Spending by households in January rose 0.6 pct in real
terms from a year before to an average 296,472 yen, the first rise in 13 months,
the Ministry of Internal Affairs and Communications said.
2007-03-01 23:57:16
Japan Jan unemployment rate 4.0 pct, unchanged from Dec
TOKYO (XFN-ASIA) - The unemployment rate stood at 4.0 pct in January,
unchanged from the revised jobless rate in December, data from the Ministry of
Internal Affairs and Communications showed.
2007-03-01 23:46:22
Japan Jan core CPI flat yr-on-yr, matching forecast
TOKYO (XFN-ASIA) - The core consumer price index, which excludes volatile
prices of fresh food but includes energy prices, was at 99.7 in January,
unchanged from a year earlier, after seven straight months of increase, the
Ministry of Internal Affairs and Communications said.
For more information and to contact AFX: www.afxnews.com and www.afxpress.com
For more information and to contact AFX: www.afxnews.com and www.afxpress.com
USD Uncertain after Uncertain FOMC Minutes
April 30, 2008 on 8:03 am | In Currency | No Comments
Action Insight | Written by ActionForex.com | Apr 11 07 18:46 GMT |
USD Uncertain after Uncertain FOMC Minutes
Even though dollar edges mildly higher after release of FOMC minutes, there isn’t enough decisive momentum to trigger some meaningful movement yet as dollar is still staying in tight range. Not much new information is revealed as the minutes continue to show the odd conflict of persistently high inflation and slower growth that the Fed is facing. On the one hand, all members agreed that Fed’s “predominant policy concern remains the risk that inflation will fail to moderate as expected”. Also, further policy firming might “prove necessary” to foster lower inflation which is slightly more hawkish. However, on the other hand, the FOMC also agreed that the statement should no longer site “only the possibility of further firming” due to “increased uncertainty about the outlook for both growth and inflation”. This opened up the possibility of a cut.
After all, if a word is needed to describe Fed’s position, we believe the Fed is neither hawkish, nor dovish. It’s not even neutral in a sense that the members are not comfortably certain that inflation and growth will play out as they expect with the current policy stance. The members are actually rather “uncertain” about which direction the next change will be and are alerted that incoming data could significantly change the stance.
Text of the minutes reposted below:
Minutes of the Federal Open Market Committee
March 20-21, 2007
A meeting of the Federal Open Market Committee was held in the offices of the Board of Governors of the Federal Reserve System in Washington, D.C., on Tuesday, March 20, 2007 at 2:30 p.m., and continued on Wednesday, March 21, 2007 at 9:00 a.m.
Present:
Mr. Bernanke, Chairman
Mr. Geithner, Vice Chairman
Mr. Hoenig
Mr. Kohn
Mr. Kroszner
Ms. Minehan
Mr. Mishkin
Mr. Moskow
Mr. Poole
Mr. Warsh
Ms. Cumming, Mr. Fisher, Ms. Pianalto, and Messrs. Plosser and Stern, Alternate Members of the Federal Open Market Committee
Messrs. Lacker and Lockhart, and Ms. Yellen, Presidents of the Federal Reserve Banks of Richmond, Atlanta, and San Francisco, respectively
Mr. Reinhart, Secretary and Economist
Ms. Danker, Deputy Secretary
Ms. Smith, Assistant Secretary
Mr. Skidmore, Assistant Secretary
Mr. Alvarez, General Counsel
Ms. Johnson, Economist
Mr. Stockton, Economist
Messrs. Connors, Evans, Fuhrer, Kamin, Madigan, Rasche, Slifman, and Wilcox, Associate Economists
Mr. Dudley, Manager, System Open Market Account
Messrs. Clouse and English,1 Associate Directors, Division of Monetary Affairs, Board of Governors
Messrs. Slifman and Struckmeyer, Associate Directors, Division of Research and Statistics, Board of Governors
Mr. Reifschneider, Deputy Associate Director, Division of Research and Statistics, Board of Governors
Messrs. Dale2 and Oliner, Senior Advisers, Divisions of Monetary Affairs and Research and Statistics, respectively, Board of Governors
Mr. Hambley,2 Assistant to the Board, Office of Board Members, Board of Governors
Mr. Meyer, Visiting Reserve Bank Officer, Division of Monetary Affairs, Board of Governors
Mr. Small,1 Project Manager, Division of Monetary Affairs, Board of Governors
Mr. Kiley2 and Ms. Kole,2 Section Chiefs, Divisions of International Finance and Research and Statistics, respectively, Board of Governors
Mr. Doyle,2 Ms. Mauskopf,2 and Mr. Wood,2 Senior Economists, Divisions of International Finance, Research and Statistics, and International Finance, respectively, Board of Governors
Ms. Roush, Economist, Division of Monetary Affairs, Board of Governors
Mr. Gross, Special Assistant to the Board, Office of Board Members, Board of Governors
Mr. Luecke, Senior Financial Analyst, Division of Monetary Affairs, Board of Governors
Ms. Low, Open Market Secretariat Specialist, Division of Monetary Affairs, Board of Governors
Mr. Rosenblum, Executive Vice President, Federal Reserve Bank of Dallas
Mr. Hakkio, Ms. Mester, Messrs. Rolnick, Rudebusch, and Sniderman, Senior Vice Presidents, Federal Reserve Banks of Kansas City, Philadelphia, Minneapolis, San Francisco, and Cleveland, respectively
Messrs. Cunningham and Hilton, Vice Presidents, Federal Reserve Banks of Atlanta and New York, respectively
Ms. Sbordone, Research Officer, Federal Reserve Bank of New York
Mr. Hetzel, Senior Economist, Federal Reserve Bank of Richmond
——————————————————————————–
1. Attended Wednesday’s session.
2. Attended portion of the meeting relating to the discussion of communications issues.
The Manager of the System Open Market Account reported on recent developments in foreign exchange markets. There were no open market operations in foreign currencies for the System’s account in the period since the previous meeting. The Manager also reported on developments in domestic financial markets and on System open market transactions in government securities and federal agency obligations during the period since the previous meeting. By unanimous vote, the Committee ratified these transactions.
The information reviewed at the March meeting indicated that the economy appeared to be expanding at a modest pace in the first quarter. Declines in residential construction activity continued to weigh on overall activity, and business investment had softened considerably over the preceding several months, especially in equipment used in the construction and motor vehicle industries. However, consumer spending had increased appreciably in the early part of the year, and labor demand continued to expand, albeit at a somewhat slower pace than last year. Meanwhile, the twelve-month increase in core consumer prices remained elevated relative to its pace one year earlier.
Employment gains moderated in early 2007. In February, employment in the construction industry contracted considerably, in part because of severe winter storms; manufacturing employment also declined, but hiring in service-producing sectors remained solid. A decline in the average workweek led to a contraction in aggregate hours. At the same time, the unemployment rate edged down from 4.6 percent in January to 4.5 percent in February.
Industrial production rose strongly in February and was revised up for both December and January. In February, production was boosted by a rebound in motor vehicle assemblies and by a temporary surge in output at utilities that reflected a swing from unseasonably warm temperatures in January to colder weather in February. Production rose at a solid pace in all major high-tech categories. Output of materials and defense and space equipment expanded as well. In contrast, production of consumer goods and business equipment changed little, while output of construction supplies declined.
Real consumer spending appeared on track to rise at a robust pace in the first quarter, buoyed in part by a weather-related surge in spending on energy services and by a jump in sales of light motor vehicles. Outside of these areas, however, real consumer spending moderated. The determinants of household spending were mixed. Disposable personal income was estimated to have risen sharply in January, but the increase was partly the result of special factors, such as pay raises for federal and military personnel and cost-of-living adjustments to Social Security payments. Meanwhile, readings on consumer sentiment, which had been favorable in recent months, edged down in early March. The boost to consumer spending from earlier gains in wealth was likely being muted by the lagged effects of the upward trend in borrowing costs. In addition, recent declines in equity prices and slowing house price appreciation pointed to a modest reduction in households’ wealth-to-income ratio in the first quarter.
Housing starts declined in January, extending the downward trend that had been in place since early 2006, but bounced back in February. However, adjusted permit issuance in the single-family sector continued to step down, suggesting that builders were still slowing the pace of new construction to work off elevated inventories. The inventory of new homes for sale remained high, although cuts in residential construction in the last few months had reduced the number of unsold homes. As at the time of the January meeting, available data suggested that housing demand was stabilizing. Sales of both new and existing single-family homes in recent months were, on balance, in line with the pace seen since mid-2006. However, a tightening of standards for subprime borrowers in recent weeks seemed likely to restrain home sales. House price appreciation had slowed further, with some measures showing outright declines in home values.
Business fixed investment had been sluggish in recent months. Real spending on equipment and software fell in the fourth quarter, and nominal orders for and shipments of nondefense capital goods excluding aircraft posted widespread declines in January, with transportation equipment showing a very large drop. Business purchases of light vehicles remained low, and new orders for and deliveries of medium and heavy trucks plunged in the last few months after a surge in 2006. Investment in goods and services other than transportation and high-tech equipment softened more than fundamentals had suggested. Declines in spending for capital equipment that is used heavily in the construction and motor vehicle industries accounted for an outsized share of the drop in orders and shipments at manufacturers outside high-tech and transportation in January. Investment in categories such as industrial equipment; electromedical, measuring, and controlling devices; and other electrical equipment also softened. In contrast, computer imports surged in January, suggesting rising domestic purchases, and computer sales appeared to have picked up in February. The ample cash reserves held by firms and ongoing reductions in the user cost of high-tech capital goods remained supportive of investment going forward.
Businesses accumulated inventories of items other than motor vehicles at a slower pace in January than in the previous two quarters. Even so, the ratio of inventories to sales for manufacturing and trade excluding motor vehicles remained elevated. In addition, purchasing managers at manufacturing firms, on net, continued to view their customers’ inventory levels as too high.
The U.S. international trade deficit narrowed considerably in the fourth quarter. Exports rose, partly reflecting a robust increase in deliveries of civilian aircraft to foreign buyers, while imports were pushed down by a fall in the volume and price of imported oil. In January, the trade deficit was little changed.
Economic activity in the advanced foreign economies accelerated in the fourth quarter. In Japan, private consumption rebounded strongly, and private investment and net exports continued to boost growth. The pace of economic expansion in the euro area picked up as investment and exports rose. Growth in the United Kingdom firmed because of brisk investment spending and a rebound in consumption growth. In contrast, output in Canada decelerated in the fourth quarter as inventory accumulation turned down sharply. Recent data for the emerging-market economies pointed to continued strength in activity, although there were signs that growth was moderating in some countries. Growth remained solid in China but decelerated in several other Asian economies and Mexico.
In January, the overall PCE price index rose moderately as a decline in energy prices helped to offset a jump in food prices. Meanwhile, the PCE price index excluding food and energy rose at a faster pace than in the previous two months. Increases in consumer energy prices and higher prices for fruits and vegetables in February reflected a period of unusually cold weather and contributed to an acceleration in that month’s CPI. Excluding food and energy, core CPI inflation slowed slightly in February but remained elevated. In recent months, prices had risen across a broad range of core goods. On a twelve-month-change basis, core CPI inflation in February was considerably above its pace a year earlier, largely because of a sharp acceleration in shelter rents over the past year. Average hourly earnings also rose at a noticeably faster pace during the year ending in February than during the preceding twelve-month period. Surveys indicated that households’ expectations of inflation over the next year were little changed in February while households’ and professional forecasters’ longer-term inflation expectations edged lower.
At its January meeting, the Federal Open Market Committee maintained its target for the federal funds rate at 5-1/4 percent. The Committee’s accompanying statement noted that recent indicators had suggested somewhat firmer economic growth and that some tentative signs of stabilization had appeared in the housing market. Overall, the economy seemed likely to expand at a moderate pace over coming quarters. Readings on core inflation had improved in recent months, and inflation pressures seemed likely to moderate over time, but the high level of resource utilization had the potential to sustain inflation pressures. The Committee judged that some inflation risks remained. The extent and timing of any additional firming that might be needed to address these risks would depend on the evolution of the outlook for both inflation and economic growth, as implied by incoming information.
The FOMC’s decision at its January meeting was in accord with market expectations, but the accompanying statement reportedly was read as a sign that the Committee was more sanguine about inflation prospects than in December, and the expected path for monetary policy beyond 2007 edged lower. Policy expectations declined a bit more in the wake of the Chairman’s semiannual monetary policy testimony, which apparently reinforced investors’ beliefs that the FOMC anticipated gradually diminishing inflation pressures. Economic data releases were somewhat weaker than expected on balance over the first few weeks of the intermeeting period, and policy expectations moved appreciably lower on net by mid-February. Financial market volatility increased sharply in the second half of the intermeeting period amid an apparent pullback from risk-taking that was reportedly spurred by mixed news on domestic economic activity, mounting concerns about the subprime mortgage sector, and significant declines in foreign equity prices. On net over the intermeeting period, investors tilted their anticipated path for monetary policy beyond mid-2007 down substantially, and yields on two- and ten-year nominal Treasury securities fell 30 to 40 basis points. Yields on inflation-indexed Treasury securities generally declined somewhat less than their nominal counterparts, leaving inflation compensation slightly lower across the term structure. Broad stock price indexes dropped several percent on net over the period. Yields on investment-grade corporate bonds fell about in line with those on Treasury securities of comparable maturity. In contrast, yields on speculative-grade bonds declined only modestly, leaving risk spreads noticeably wider, albeit still narrow by historical standards.
Domestic nonfinancial sector debt appeared to be continuing to rise at a relatively brisk rate in the first quarter. Despite the recent volatility in financial markets, funding in the bond and syndicated loan markets appeared to remain readily available. However, borrowing by nonfinancial corporations was estimated to be moderating somewhat in the first quarter, with a step-down in bond issuance associated with merger and acquisition activity. Indicators pointed to a continuing deceleration in house prices this quarter, and home mortgage borrowing probably continued to slow. M2 increased more moderately in February than at the end of 2006 as the expansion of liquid deposits slowed from its outsized fourth-quarter rate.
In its forecast prepared for this meeting, the staff marked down the projected increase in real GDP in the first quarter in response to weaker-than-expected incoming data on business equipment spending and federal defense purchases. The recent increase in oil prices and decline in equity prices, along with increased strains in the subprime mortgage sector, were expected to exert some drag on real activity over the remainder of the year. Even so, real GDP growth was expected to pick up to a rate a little below that of the economy’s long-run potential for the remainder of 2007, as declines in residential construction activity lessened, and to remain at a similar rate in 2008. The increase in energy prices over the intermeeting period led the staff to revise up its forecast for headline PCE inflation during the first half of this year, but the staff continued to expect that core PCE inflation would edge down over the remainder of this year and next.
In their discussion of the economic situation and outlook, meeting participants agreed that, while recent economic data had been mixed, the economy was likely to expand at a moderate pace in coming quarters. Although the housing sector adjustment continued, accumulating data suggested that the demand for homes was leveling out. Business fixed investment had been soft in recent months, but financing conditions and other fundamentals remained favorable for a pickup in capital spending. Moreover, continuing gains in personal income could be expected to support growth in consumer spending. Thus economic growth likely would increase in coming quarters to a pace close to or modestly below the economy’s trend growth rate. However, additional evidence of sluggish business investment and recent developments in the subprime mortgage market suggested that the downside risks relative to the expectation of moderate growth had increased in the weeks since the January FOMC meeting. At the same time, the prevailing level of inflation remained uncomfortably high, and the latest information cast some doubt on whether core inflation was on the expected downward path. Most participants continued to expect that core inflation would slow gradually, but the recent readings on inflation and productivity growth, along with higher energy prices, had increased the odds that inflation would fail to moderate as expected; that risk remained the Committee’s predominant concern.
Participants reported signs of stabilization in housing demand in most regions of the country. At the national level, sales of new and existing homes, while fluctuating in recent months, did not display declining trends. The inventory of new homes for sale reportedly had fallen further from its recently elevated level. Participants noted, however, that such inventories likely would need to be worked down appreciably more before growth in housing construction would resume. The increase in delinquencies on subprime adjustable-rate mortgage loans and the ensuing increase in interest rates and tightening of credit standards in the subprime mortgage market likely would constrain home purchases by some borrowers, perhaps retarding the recovery in the housing sector. However, there was no sign of spillovers from the subprime market to the overall mortgage market; indeed, interest rates on prime mortgage loans had declined somewhat in recent weeks, along with yields on U.S. Treasury securities. Moreover, home-buying attitudes had improved and continuing job growth could be expected to support home sales.
Business fixed investment spending had been surprisingly weak of late, given strong corporate balance sheets, high profitability, anticipated growth in sales, and favorable financial conditions. Participants continued to expect these fundamentals to support a firming of investment spending going forward, and they saw no indication that recent market volatility had prompted a reduction in the availability of financing for business investment. Also, declining office vacancy rates in some areas were spurring gains in nonresidential construction activity, and further advances in commercial construction were seen as likely. Energy prices were high enough to encourage continued investment in alternative fuels. However, the relatively slow pace of investment in recent months might be signaling that business executives had become less certain about the outlook, and perhaps that they expected quite modest gains in sales. Participants agreed that the possibility of persistently sluggish investment spending was an important downside risk to the outlook for economic growth.
Growth in consumer spending would likely continue to be supported by gains in employment and incomes. Meeting participants noted that weakness in the housing market had not spilled over to aggregate consumption–though the flattening out in house prices likely would contribute to an increase in the personal saving rate–and turmoil in the subprime mortgage market did not appear to be generating any diminution in the availability of other types of household credit. The recent increase in oil prices and the reduction in household net worth resulting from the small net declines in equity prices during the intermeeting period warranted a modest downward adjustment in projected growth of consumer spending. Even so, the possibility that the personal saving rate would fail to rise as projected in the staff forecast remained an upside risk to the outlook.
Growth in federal as well as state and local government spending probably would remain a source of stimulus to the economy. Moreover, continued expansion in domestic demand in our major trading partners could be expected to sustain solid growth in U.S. exports.
Many participants again reported softness in manufacturing, primarily but not exclusively in industries related to housing or automobiles. However, a number of firms outside of the housing sector–including auto companies–appeared to have made progress in reducing inventories to more comfortable levels, and contacts in the industrial sector were generally optimistic about future growth. Such attitudes were consistent with national and regional surveys that pointed to a rebound in manufacturing activity later this year.
Anecdotal and statistical evidence suggested that labor markets remained relatively tight. Business contacts continued to report shortages of skilled workers in technical and professional fields, with significant wage pressures in some occupations, as well as a scarcity of less skilled and unskilled workers in some areas of the country. So far, aggregate measures of labor compensation were showing only moderate increases, but, looking ahead, the possibility that labor costs might rise more rapidly was seen as an upside risk to inflation. It was noted, however, that increases in compensation that exceeded productivity gains might be absorbed to some extent by a narrowing of firms’ high profit margins. Participants expected that productivity growth would pick up as firms slowed hiring to a pace more in line with output growth but acknowledged that the improvement might be limited, particularly if business investment spending were to remain soft.
Most participants continued to expect a gradual decline in core inflation over the next year or two, fostered by stable inflation expectations, a likely deceleration in shelter costs, and a slight easing of pressures on resources. Nonetheless, all meeting participants expressed concern about the risks to this outlook. The latest readings on core inflation were higher than expected, and it was difficult to discern whether the apparent downward trend in core inflation during the past few quarters was continuing. Also, the recent increases in prices for energy and some non-energy imports likely would boost overall inflation in the near term and might put upward pressure on prices of some core goods and services. Moreover, rates of resource utilization that were near the high end of historical experience suggested a possibility that inflation pressures could build. Participants agreed that risks around the expected and desired path of a gradual decline in core inflation remained mainly to the upside; some noted that upside risks to inflation appeared to have increased slightly in recent months.
In the Committee’s discussion of monetary policy for the period between its March and May meetings, all members favored keeping the target federal funds rate at 5-1/4 percent. Recent developments were seen as supporting the Committee’s view that maintaining the current target was likely to foster moderate economic growth and to further the gradual reduction of core inflation from its elevated level. Nonetheless, the combination of generally weaker-than-expected economic indicators and uncomfortably high readings on inflation suggested increased downside risks to economic growth and greater uncertainty that the expected gradual decline in core inflation would materialize.
In light of the recent economic data and anecdotal information, the Committee agreed that the statement to be released after the meeting should note that economic indicators had been mixed, that the adjustment in the housing market was ongoing, and that the economy seemed likely to expand at a moderate pace over coming quarters. Members agreed the statement also should indicate that inflation pressures seemed likely to moderate over time, but that recent readings on core inflation had been somewhat elevated and the high level of resource utilization had the potential to sustain inflation pressures. A persistence of inflation at recent rates could eventually have adverse consequences for economic performance. All members agreed the statement should indicate that the Committee’s predominant policy concern remains the risk that inflation will fail to moderate as expected. The Committee agreed that further policy firming might prove necessary to foster lower inflation, but in light of the increased uncertainty about the outlook for both growth and inflation, the Committee also agreed that the statement should no longer cite only the possibility of further firming. Instead, the statement should indicate that future policy adjustments will depend on the evolution of the outlook for both inflation and economic growth, as implied by incoming information.
At the conclusion of the discussion, the Committee voted to authorize and direct the Federal Reserve Bank of New York, until it was instructed otherwise, to execute transactions in the System Account in accordance with the following domestic policy directive:
“The Federal Open Market Committee seeks monetary and financial conditions that will foster price stability and promote sustainable growth in output. To further its long-run objectives, the Committee in the immediate future seeks conditions in reserve markets consistent with maintaining the federal funds rate at an average of around 5-1/4 percent.”
The vote encompassed approval of the text below for inclusion in the statement to be released at 2:15 p.m.:
“In these circumstances, the Committee’s predominant policy concern remains the risk that inflation will fail to moderate as expected. Future policy adjustments will depend on the evolution of the outlook for both inflation and economic growth, as implied by incoming information.”
Votes for this action: Messrs. Bernanke, Geithner, Hoenig, Kohn, and Kroszner, Ms. Minehan, Messrs. Mishkin, Moskow, Poole, and Warsh.
Votes against this action: None.
The Committee then returned to the topic of improving policy communications. Participants expressed a range of views on the possible advantages and disadvantages of specifying a numerical price objective for monetary policy and on technical aspects of a quantification. Participants emphasized that any such move would need to be consistent with the Committee’s statutory objectives for promoting maximum employment as well as price stability. The Committee made no decisions on this issue. Participants also discussed the communications role of the economic projections that are made periodically by the members of the Board of Governors and the Reserve Bank presidents. A number of substantive and practical issues would still need to be evaluated before the Committee could make decisions about an enhanced role for projections in explaining policy. The Committee planned to continue its review of communication issues at the FOMC meeting in June 2007.
It was agreed that the next meeting of the Committee would be held on Wednesday, May 9, 2007.
The meeting adjourned at 1:30 p.m.
Notation Vote
By notation vote completed on February 20, 2007, the Committee unanimously approved the minutes of the FOMC meeting held on January 30-31, 2007.
Vincent R. Reinhart
Secretary
Economic woes plague Dollar
April 30, 2008 on 8:03 am | In Currency | No Comments
The story behind the Dollars decline contains two threads: narrowing interest rate differentials and growing concerns surrounding the US economy.With most of the industrialized worlds Central banks not scheduled to meet again for a few weeks, the interest rate story can temporarily be placed on hold in favor of the economic story, which is becoming uglier every day.The centerpiece remains the US housing market, which many analysts believe will soon slide into a major rut. There is a great deal of uncertainty over whether homes can retain their value and if borrowers will be able to pay off their mortgages.Rising rates have squeezed many low-income, high-risk borrowers, causing a crisis of growing proportions in the market for mortgage-backed securities, which is at risk for spreading to other areas of securities markets.Forbes reports:
Credit concerns, rating reviews, yields tumbling; it has been one-way traffic against the dollar in recent minutes and euro/dollar has rallied up a fresh all-time high.
Read More: «www.forbes.com»
Mid-Day Report: Dollar Rebounds Despite Mixed Data, Yen Pressured ahead of BoJ
April 30, 2008 on 2:43 am | In Currency | No Comments
Action Insight | Written by ActionForex.com | May 16 07 13:40 GMT |
Forex Mid-Day Technical Report Dollar Rebounds Despite Mixed Data, Yen Pressured ahead of BoJ
Dollar strengthens in early US session despite mixed data. Industrial production surprised on the upside by rising 0.7% mom in Apr, much better than expectation of 0.3%. Capacity utilization rose slightly to 81.6%. US housing starts rose 2.5% to 1.528m in Apr. However, building permits tumbled sharply by 8.9% to 1.43m, lowest in almost a decade. The report echoed yesterday’s NAHB sentiment index which fell to 30 in Apr, reaching the lowest since 91. The data suggest that weakness in the housing market remains and will likely continue through Q2. Nevertheless, dollar rebounds against European majors and in particular, strengthens against Japanese yen. Yen remains pressured across the board ahead of BoJ rate announcement which is widely expected to keep rates unchanged at 0.5%.
The Quarterly Inflation Report from BoE today is basically consistent with market’s view that BoE is not yet done with last week’s hike in the current tightening cycle and another hike will likely be seen in Q3. On balance, the MPC’s assessment of inflation is “similar” to the prior report in Feb that price growth “falls “falls back sharply to below the target” by mid-2008 and rebounds thereafter “to settle around the target” in two years time. Risks are viewed on the upside. Growth expectations are “very similar” to prior report and in line with the 2.8% ten-year average. The most important part of the repost is that the above forecasts are based on the assumption that “Bank Rate follows a path implied by market yields”. With market yield now implying slightly above 5.75% by year end, it’s likely that BOE will have another hike in Q3. Employment report from UK showed labor market continued to tighten at a gradual pace. In April, the claimant rate fell to 2.8% from 2.9%, while during the first quarter the ILO rate held at 5.5%. Earnings growth, though, slowed slightly to 4.5% in the first quarter from 4.6%, contrary to expectation of rising to 4.8%. EUR/USD
Daily Pivots: (S1) 1.3541; (P) 1.3575; (R1) 1.3625; http://www.actionforex.com/forex_analysis_and_forecasts/pivot_points/pivot_points_summary_200603205734/
EUR/USD retreats sharply after rebound from 1.3461 is limited at 1.3609, below mentioned 1.3627 and channel support turned resistance. Though another rise cannot be ruled out as long as EUR/USD stays above 1.3526 support, with 1.3627 remains intact, the original case is still in favor. That is, whole rally from 1.2865 has likely completed at 1.3681 after breaking through short term channel support and deeper decline should be seen. However, a break below 1.3526 support is needed to signal the completion of the rebound from 1.3461 first and bring retest of this low and then 1.3406/10 support zone (with 55 days EMA at 1.3421 now). On the upside, break of 1.3627 resistance will indicate that the fall from 1.3681 is merely a correction and has completed. In such case, rise from 1.2865 is still in progress for above 1.3681 high.
In the bigger picture, with 1.3668 target met, risk of medium term reversal is also increasing. As discussed before, medium term up trend from 1.1639 is interpreted as having first move completed with three waves up to 1.2978, subsequent sideway consolidation completed at 1.2483. Rise from 1.2483 is treated as resumption of the whole up trend from 1.1639. With such interpretation we’d expect risk of medium term reversal to increase significantly as EUR/USD enter into resistance zone between 1.3668 and 100% projection of 1.1639 to 1.2978 from 1.2483 at 1.3822. Hence, focus is now on reversal signals.
On the downside, break of the short term rising channel support is already a warning that the rise from 1.2865 has completed. Decisive break of 1.3406/10 support, with 55 days EMA (now at 1.3421) taken out too, will confirm such case. More importantly, with bearish divergence condition in daily MACD and RSI, this will be the first warning that the whole rally from 1.2483 has also completed, and, so is the whole up trend from 1.1639. Focus will then be back to medium term rising channel support (now at 1.3028).
GBP/USD
Daily Pivots: (S1) 1.9780; (P) 1.9825; (R1) 1.9905; http://www.actionforex.com/forex_analysis_and_forecasts/pivot_points/pivot_points_summary_200603205734/
Cable retreats after recovery from 1.9742 failed to break through 4 hours 55 EMA again (now at 1.9864). With 4 hours MACD staying above signal line, further consolidation and another recovery cannot be ruled out. But still, short term outlook remains bearish after previous break of the short term rising channel that indicates that rally from 1.9183 has likely completed at 2.0132 already. Hence, upside is still expected to be limited below 1.9999 resistance and bring another fall.
On the downside, sustained trading below 1.9766/75 support (38.2% retracement of 1.9183 to 2.0132 at 1.9769, with 55 days EMA at 1.9775) will encourage deeper decline towards next important support zone of medium term rising channel support (now at 1.9533) and 1.9545 cluster support (61.8% retracement of 1.9183 to 2.0132 at 1.9546). However, firm break of 1.1999 will indicate that the correction from 2.0132 is completed and could bring retest of this high.
In the bigger picture, we’d like to maintain that risk of medium term reversal remains high and is increasing. Firstly, the whole up trend from 1.7047 is not clearly impulsive. One interpretation is that rally from 1.7047 ended with three waves up to 1.9024. Subsequent correction ended at 1.8090. Rally from 1.8090 has already met mentioned target of 100% projection of 1.7047 to 1.9024 from 1.8090 at 2.0067. Secondly, regardless of the larger trend, rise from 1.8090 can be interpreted as being a five wave sequence with first wave ended at 1.9142, second at 1.8517, third at 1.9913 and fourth at 1.9183. The channeling property supports this interpretation too. In such case, the fifth wave rally from 1.9183 has also met target of 61.8% projection of 1.8517 to 1.9913 from 1.9183 at 2.0046 too. With bearish divergence condition remains in weekly RSI and Daily MACD and key 2.0106 resistance (92 high) not decisively taken out, cable could be forming a top at the current price level.
On the downside, firm break of the medium term rising channel support (now at 1.9533) will indicate that the whole rally from 1.8090 has completed and add much credence to the case that an important medium term top is already in place and put focus to 1.9183 low. However, sustained trading above mentioned 2.0106 resistance will dampen the above interpretation and indicates that underlying bullishness in cable is much stronger then we thought. Further medium term rally should then be seen towards 61.8% projection of 1.3680 (01 low) to 1.9554 (05 high) from 1.7047 (05 low) at 2.0677.
USD/CHF
Daily Pivots: (S1) 1.2117; (P) 1.2160; (R1) 1.2195; http://www.actionforex.com/forex_analysis_and_forecasts/pivot_points/pivot_points_summary_200603205734/
Following dollar’s broad based rebound, USD/CHF rises in early US session. Short term outlook remains neutral as this point. But still, break of 1.2079 support is needed to confirm that rebound from 1.1993 has completed and bring retest of this low. Otherwise, further rebound cannot be ruled out. Meanwhile, above 1.2223 again will encourage another rise towards 1.2282 cluster resistance (50% retracement of 1.2571 to 1.1993 at 1.2282)
In the bigger picture, firstly, note that weekly MACD remains below signal line and USD/CHF is still trading comfortably below 55 weeks EMA (now at 1.2358), medium term risk remains on the downside and the current rebound from 1.1993 could merely be part of a sideway consolidation to the whole fall from 1.2571. The original case is still in favor as long as 1.2282 cluster resistance holds. That is the whole down trend from 1.3283 is still in progress with the first move from 1.3283 finished with three waves down to 1.1919. Subsequent rebound to 1.2768 was the interim correction and price actions from there represent resumption of such down trend. Break of 1.1993 low will add more credence to this case and bring further decline to 1.1878 low.
However, strong break of 1.2282 cluster resistance will dampen this view and indicate that the fall from 1.2571 has completed after meeting 1.2026 fibo support (78.6% retracement of 1.1878 to 1.2571). Another rise could then be seen to retest this high and then the upper end of the range at 1.2768.
USD/JPY
Daily Pivots: (S1) 120.06; (P) 120.31; (R1) 120.52; http://www.actionforex.com/forex_analysis_and_forecasts/pivot_points/pivot_points_summary_200603205734/
USD/JPY’s rise extends further today by reaching as high as 120.69 so far and is now pressing 78.6% retracement of 122.17 to 115.13 at 120.66. Sustained break of this fibo resistance will confirm recent rally has resumed. Next upside target will be trend line resistance at 120.15. However, below 120.14 will indicate an intraday top is formed and risk pull back towards 119.44 support. But as long as 119.44 support remains intact, rise from 117.60 should still be in progress and further rally is still in favor.
In the bigger picture, previous break of medium term rising channel support (108.99, 114.41, 117.87) indicates the whole medium term rally from 108.99 has completed at 122.17. However, firm break of falling trend line resistance (122.05 to 121.61) and sustained trading above 119.48 fibo resistance (61.8% retracement of 122.17 to 115.13) indicates price actions from 122.17 is probably developing into sideway consolidation to rise from 108.99 only, instead of a sharp reversal. Hence, a retest of 122.17 high could be seen. But still, firm break above this resistance is needed to confirm medium term rally from 108.99 has resumed. Otherwise, medium term outlook will be neutral at best and risk of another fall remains.
On the downside, a firm break below 117.60 support will confirm that rebound from 115.13 has completed and deeper fall should then be seen to retest this low and probably further towards 114.02/41 support zone (61.8% retracement of 108.99 to 122.17 at 114.02). But firm break of this support zone is needed to confirm the underlying medium term bearishness and shift favors back to the case that fall from 122.17 is the third leg of a wide range consolidation that started at 121.38 (first leg completed at 108.99, second at 122.17). Otherwise, as discussed before, price actions from 122.17 could merely be developing into sideway consolidation only and further medium term rally could still be seen.
EUR/JPY
Daily Pivots: (S1) 162.84; (P) 163.24; (R1) 163.84; http://www.actionforex.com/forex_analysis_and_forecasts/pivot_points/pivot_points_summary_200603205734/
EUR/JPY edges further high to 163.85 in early US session, continuing to make new record high. At this point, short term bias remains on the upside as long as EUR/JPY stays above 162.64 minor support and further rise could still be seen towards 61.8% projection of 137.16 to 159.63 from 150.75 at 164.64.
However, we’d maintain that risk of a short term reversal remains high after previous break of the short term rising channel, with bearish divergence condition staying in 4 hours MACD and RSI and with daily MACD remains below signal line. Below 162.64 will suggest that EUR/JPY has failed 163.59 resistance and deeper decline should then be seen towards 161.05 support and then 159.60 support (with 55 days EMA at 160.18).
In the bigger picture, EUR/JPY’s previous break above medium term rising channel resistance suggests that strength of the rally from 150.75 could be much stronger than we thought. But still, interpretation of rally from 130.60 remains unchanged. First wave up ended at 143.60, subsequent correction ended at 137.167. The third wave up ended at 159.63 while fourth wave correction has ended at 150.75. Rise from there represents the final advance in this structure, targeting 61.8% projection of 137.16 to 159.63 from 150.75 at 164.64 and could terminate there.
On the downside, break of the short term channel support indicates that rise from 150.75 has completed and another fall could still be seen towards 159.60 support. Rise from 150.75 will still likely to resume as long as this support holds. However, sustained trading below 159.60, with 55 days EMA taken out too, will warn that prior break of medium term rising channel resistance was merely a throw-over. Also, this will give a serious warning signal that the whole rise rise from 130.60 has ended. EUR/JPY should set to channel the medium channel support (now at 153.32) in such case.
Forex News Digest
http://www.bloomberg.com/apps/news?pid=20601087&sid=aEW6N7hQjCfk&refer=home
http://www.bloomberg.com/apps/news?pid=20601103&sid=aDlkWNDJFh8g&refer=us
http://www.bloomberg.com/apps/news?pid=20601102&sid=aKfTjtnWoMEQ&refer=uk
http://c.moreover.com/click/here.pl?r936566617
Wed, 16 May 2007 10:41:00 GMT from Reuters
http://c.moreover.com/click/here.pl?r936562816
Wed, 16 May 2007 10:19:00 GMT from Reuters UK
http://c.moreover.com/click/here.pl?r936547765
Wed, 16 May 2007 08:43:00 GMT from The Australian
http://c.moreover.com/click/here.pl?r936479165
Wed, 16 May 2007 06:47:00 GMT from International Herald Tribune
http://c.moreover.com/click/here.pl?r936475878
Wed, 16 May 2007 06:45:00 GMT from Bloomberg
http://c.moreover.com/click/here.pl?r936464089
Wed, 16 May 2007 06:34:00 GMT from Bloomberg
http://c.moreover.com/click/here.pl?r936458519
Wed, 16 May 2007 06:18:00 GMT from Bloomberg
http://c.moreover.com/click/here.pl?r936448676
Wed, 16 May 2007 05:58:00 GMT from Bloomberg
http://c.moreover.com/click/here.pl?r936426375
Wed, 16 May 2007 05:20:00 GMT from Bloomberg
http://www.actionforex.com/latest_news/latest_news/forex_news_20060323537/ Economic Indicators Update
GMT Ccy Events Actual Consensus Previous Revised
00:30 AUD Australia Westpac consumer confi. May 7.50% N/A -0.20%
01:30 AUD Australia WPI Q/Q Q1 1.00% 1.30% 1.10%
01:30 AUD Australia WPI Y/Y Q1 4.10% 4.40% 4.00%
04:00 JPY Japan Capacity utilisation Mar 106.3 106.3 106.3
04:30 JPY Japan Industrial prod’n M/M Mar -0.30% -0.60% -0.60%
05:00 JPY Japan Consumer confidence Apr 47.4 48.6 46.8
06:00 EUR Germany CPI final M/M Apr 0.40% 0.40% 0.40%
06:00 EUR Germany CPI final Y/Y Apr 1.90% 1.90% 1.90%
06:00 EUR Germany HICP final M/M Apr 0.40% 0.40% 0.40%
06:00 EUR Germany HICP final Y/Y Apr 2.00% 2.00% 2.00%
08:30 GBP U.K. Claimant count Apr -15.7K -5.5 K -9.2 K -14.3K
08:30 GBP U.K. ILO unemployment rate Mar 5.50% 5.50% 5.50%
08:30 GBP U.K. Avg. earnings 3mths Y/Y Mar 4.50% 4.80% 4.60%
09:00 EUR Eurozone HICP final M/M Apr 0.60% 0.50% 0.70%
09:00 EUR Eurozone HICP final Y/Y Apr 1.90% 1.80% 1.90%
09:30 GBP BOE Quarterly Inflation Report
12:30 USD U.S. Building permits Apr 1.43M 1.52 M 1.57M 1.57M
12:30 USD U.S. Housing starts Apr 1.53M 1.48 M 1.52 M 1.49M
13:15 USD U.S. Capacity utilisation Apr 81.60% 81.50% 81.40% 81.20%
13:15 USD U.S. Industrial prod’n M/M Apr 0.70% 0.30% -0.20% -0.30%
http://www.actionforex.com/general_information/forex_newsletters/forex_newsletter_200507301487/
Business events scheduled for Wednesday
April 29, 2008 on 9:57 pm | In Currency | No Comments
(AP) - Major business events and economic events scheduled for Wednesday:
WASHINGTON — Commerce Department reports on durable goods orders for March, 8:30 a.m., and new home sales for March, 10 a.m.
WASHINGTON — Federal Reserve releases survey of regional economic conditions, 2 p.m.
WASHINGTON — House Financial Services Committee hearing on industrial banks.
WASHINGTON — House Education and Labor Committee hearing on the student loan industry.
WINDHOEK, Namibia — Hearing on a bid to extradict fugitive businessman Jacob “Kobi” Alexander to the United States to face trial for alleged stock-option fraud.
GREENVILLE, S.C. — General Electric Co. holds its annual shareholder meeting
INDIANAPOLIS — Wellpoint Inc. reports earnings.
ST. LOUIS — Anheuser-Busch Cos. release first-quarter earnings.
CUPERTINO, Calif. — Apple Inc. releases second-quarter earnings.
CHICAGO — Boeing Co. releases first-quarter earnings.
NEW YORK — Colgate-Palmolive Co. releases first-quarter earnings.
HOUSTON — ConocoPhillips releases first-quarter earnings.
CORNING, N.Y. — Corning Inc. releases first-quarter earnings.
NORTH CANTON, Ohio — Diebold Inc. releases first-quarter earnings.
CINCINNATI — E.W. Scripps Co. releases first-quarter earnings.
NEW ORLEANS — Freeport-McMoran Copper & Gold Inc. releases first-quarter earnings.
FALLS CHURCH, Va. — General Dynamics Corp. releases first-quarter earnings.
LONDON — GlaxoSmithKline PLC releases first-quarter earnings.
SOUTHFIELD, Mich. — Lear Corp. releases first-quarter earnings.
NORFOLK, Va. — Norfolk Southern Corp. releases first-quarter earnings.
PURCHASE, N.Y. — PepsiCo Inc. releases first-quarter earnings.
BLOOMFIELD HILLS, Mich. — Pulte Homes Inc. releases first-quarter earnings.
SAN DIEGO — Qualcomm Inc. releases second-quarter earnings.
WALTHAM, Mass. — Raytheon Co. releases first-quarter earnings.
WINSTON-SALEM, N.C. — Reynolds American Inc. releases first-quarter earnings.
ARLINGTON HEIGHTS, Ill. — UAL Corp. releases first-quarter earnings.
ATLANTA — United Parcel Service Inc. releases first-quarter earnings.
DUBLIN, Ohio — Wendy’s International Inc. releases first-quarter earnings.
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