Macroview

Limited short-term potential for dollar, yen will continue to weaken

US dollar/euro. The recent break to a fresh 14-year price low after 21 months of consolidation opens the way for a move towards parity in the EUR/USD rate in the next few months. Still, growth in the US is likely to be hurt in the coming months by the ongoing tightening in monetary conditions brought […]

Swiss National Bank focuses on “overall currency situation”

At its quarterly assessment in December, the Swiss National Bank (SNB) left its accommodative monetary policy unchanged. The interest rate on sight deposits with the SNB was maintained at a record low of -0.75% and the SNB reiterated its willingness to intervene again on the foreign exchange market if needed, “taking the overall currency situation […]

Fed revises rate projections higher: ours remain unchanged

The decision by the Fed this week to raise the Fed funds rate target range by 25bp to 0.5%-0.75% was widely expected. More surprisingly for the market was certainly the upward revisions in the (in)famous ‘dot plot’. The Federal Open Market Committee’s (FOMC) median forecast for Fed funds rates at the end of 2017 was […]

Sizing up the changes in ECB’s monetary policy

In December, the ECB made important changes to its quantitative easing (QE) programme, deciding to extend it by at least nine months to December 2017 while scaling down the pace of its asset purchases from EUR80 bn to EUR60 bn from April. The ECB also announced the easing of technical constraints through the removal of […]

China maintains economic momentum

The latest data releases out of Beijing indicate steady momentum in the Chinese economy. Exports are showing signs of recovery and investment in manufacturing is helping to offset a recent drop in property investment. All in all, the latest data releases are consistent with our full-year GDP forecast of 6.7% in 2016. Looking ahead, we […]

Slower for (much) longer: ECB extends QE

The ECB made the following announcements at its 8 December meeting: • QE extension: asset purchases will be continued for an extra nine months, at a pace of EUR60 bn month from April to December 2017 (or beyond, if necessary), with an option to increase the size and/or duration of purchases if “the outlook becomes […]

Signs of life in Japanese inflation

The labour survey for October shows that wage growth remains sluggish in Japan, despite increasing signs of tightness in the labour market. Nonetheless, inflation in Japan may start to move higher on account of external factors such as the exchange rate and commodity prices. Japanese workers’ cash earnings rose by just 0.1% year-over-year in October. […]

Global sentiment indicator supports growth scenario

Global sentiment improved slightly in November, to 52.1 from 52.0 in October, according to Markit’s global Purchasing Manager Index (PMI). This is the third monthly improvement in a row. One has to look back to August 2014 to find a higher level. Advanced economies are among the more upbeat. Business sentiment in November was highest […]

What next for Italy after referendum?

The Italian referendum on Senate reform was rejected on 4 December by a surprisingly wide margin (59% versus 41%) on high voter turnout. In the short run, the main risk is that rejection of the government-backed referendum will render a market-based recapitalisation of the Italian banking sector more difficult. Italian banks will remain under considerable […]

Healthy U.S. jobs report points to early rate hike

US non-farm payroll employment rose by a healthy 178,000 month-on-month (m-o-m) in November, in line with consensus expectations. Unexpectedly, the US unemployment rate fell further in November, to 4.6% from 4.9% in October, reaching its lowest level in more than nine years. At 4.6%, the US unemployment rate is now below the median rate of […]

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