Archive for forex blog

Chart: Chinese Rate Hike Doesn’t Matter

For the second time this year and the fourth time since 2010, the Chinese government raised interest rates by 25bp, bringing its lending and deposit rates to 6.31 and 3.25 percent. Like many other countries around the world, China is worried about rising inflation pressures and the negative impact that it could have on [...]

100bp of Tightening Priced in for ECB?! See Latest G7 Rate Hike Expectations

Rate hike expectations are always changing and its important to keep track of them because they reflect what investors are pricing in.
Here are the latest numbers and highlights (compared to last week)
Fed - One 25bp rate hike expected by Q1 2012 > Minor increase in implied policy changes
BoE - 50bp rate hike priced [...]

BNN Video - Talking Yen Intervention

I was on the Business News Network talking about intervention in Japan, whether it has been successful, Libya and the outlook for the FX market. Click on the image to access the video

Japanese Intervention was Not Sterilized - What Does that Mean?

The Bank of Japan said explicitly last night that their intervention will NOT be sterilized. This is VERY good because it gives their intervention efforts a greater chance of succeeding.
Intervention by central banks is one of the most important short-term and long-term fundamental drivers in the currency market. For short-term traders, intervention [...]

Power of Past G7 Mtgs: Euro and JPY Charts

The following charts of the EUR/USD and USD/JPY shows the power of G7 meetings. As you can see, their announcements have frequently marked a top or bottom in the currency pairs. Sometimes this happens immediately and other times it takes a while longer. Judge for yourself what will happen this time around:

G7 Statement on Coordinated FX Intervention

18 March 2011 - Statement of G7 Finance Ministers and Central Bank Governors
We, the G7 Finance Ministers and central bank governors, discussed the recent dramatic events in Japan and were briefed by our Japanese colleagues on the current situation and the economic and financial response put in place by the authorities.
We express our solidarity with [...]

CNBC Video: All About the Yen

I was on CNBC Power Lunch this afternoon talking about the Japanese Yen and intervention risk.

Latest Data: Major Changes to Rate Hike Expectations

The volatility in the financial markets has led to major changes in rate hike expectations. Here are the latest numbers and the highlights compared to a month ago (see Feb numbers):
Fed - One 25bp rate hike expected by Q1 2012 instead of 50bp
BoE - One 25bp rate hike expected this year instead of 75bp
ECB - [...]

Has Japan’s Earthquake Stopped Mrs Watanabe from Trading?

The sharp rise in the Japanese Yen has triggered a lot of talk of repatriation by Japanese investors and the price action of the Japanese Yen certainly suggests that this could be true, but has the earthquake really put investors offline? I did some research on this and here’s what I found:
1) The MoF publishes [...]

USD/JPY: Top 10 Largest Moves and How the BoJ Responded

The sell-off in USD/JPY this evening is one of the top 5 largest moves ever for USD/JPY. Whenever USD/JPY experiences such sharp volatility over a short period of time, the Bank of Japan usually comes in to quell the volatility. The following table shows the Bank of Japan’s actions in response to the [...]