Thursday 29 July 2010

BOJ Deputy Governor Yamaguchi across the wires (Reuters)…seeking ways to boost potential growth

both upside/downside risks higher than in April Japanese economy gradually improving want to think what more BOJ can do to boost potential growth global market instability is rising again need to work closely with other CBs to ensure market stability export strength gradually spreading to private demand balance sheet adjustment still exerting downward pressure on US & EU economies need to watch if the output gap is sustainable signs of overheating in emerging economies increasing steps to support Japan's growth areas not limited to BOJ's latest lending scheme

BoE considers every option before keeping rates (Barcelona) - The Bank of England stayed on track and kept interest rates unchanged. The minutes show that inflation is considered to subside eventually: "it seemed likely that growth would be weaker than previously expected but, at least for a while, inflation was likely to be higher. But the Committee’s central view remained that the substantial margin of spare capacity was likely to persist for some time and would bear down on inflation over the medium term."

Talks about bringing rates down did take place as stated in the minutes: "The softening in the medium-term outlook for GDP growth over recent months would put further downwards pressure on inflation, once the impact of temporary factors had waned. Pay growth had remained subdued and there was little sign of a material pickup in medium-term inflation expectations. A further modest monetary stimulus would act to offset the softening in demand prospects and make it more likely that the inflation target would be met in the medium term."

Even in the current state of the economy, the committee discussed a raise in rates as well: "Inflation was likely to remain above target for some months and there was a risk that medium-term inflation expectations would rise. The resilience of inflation over recent months had suggested that the downward impact of spare capacity could be weaker than expected and this created uncertainty around the extent to which inflation would fall back in the future."

ForexLive Asian market wrap: chance of RBA rate hike recedes

Australian CPI trimmed mean +0.5% Vs +0.8% forecast Chances of RBA rate hike next week now virtually zero RBNZ expected to raise New Zealand rates tomorrow by 25bps South Korean June current account surplus $4.2 billion South Korean central bank seen buying USD/KRW Annual IMF report on China released: drops reference to Yuan being substantially undervalued UK economy: NIESR raises 2010 forecast but lowers forecast for 2011 Regional stockmarkets up by between 0.25% and 1.9% It has been a moderately busy session here in Asia today, with most of the interest centering on the release of Australia's latest CPI figures. RBA boss Glenn Stevens said last week that the RBA would be watching the number closely, so if he is there wil be no rate hike next week as the trimmed mean showed a significant decline. This coming on the back of Monday's PPI will seal the deal for further pauses. AUD/USD fell from .9020 to .8950 immediately after the number and has been unable to bounce since as traders exit their long AUD positions against all other major currencies. Ranges: AUD/USD .8925/.9025; AUD/NZD 1.2203/1.2334. EUR/USD drifted lower in early trade as early Tokyo booked profits in EUR/JPY after the big move higher in that cross overnight. EUR/USD fell to its session low after the Australian data but has since recovered as the short covering on all EUR cross pairings has continued. Ranges: EUR/USD 1.2968/1.3007; EUR/CHF 1.3767/90. USD/JPY was unwilling or unable to test corporate offers at 88.00 and has slowly drifted lower albeit in fairly tight ranges. AUD/JPY selling has been outweighed by EUR/JPY buying on the crosses. Ranges: USD/JPY 87.66/93; EUR/JPY 113.75/114.30 Cable has been quietest of the major pairings in a 1.5564/96 range and EUR/GBP .8330/43. Markets: Nikkei +1.9%, HK +0.6%, Shanghai +0.9%, Kospi +0.2%. Gold $1162/oz.

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