Ashraf Laidi discusses the "surprising" release of the minutes from the December FOMC meeting indicating "Several" FOMC members favoured stopping or slowing the pace of asset purchases well before end of 2013. Ashraf clarifies there is a vast ocean between slowing down the pace of purchases, seizing purchases altogether, and starting to sell bonds. Slowing the pace of purchases by no means implies a policy tightening. The impact of any shift in policy is more likely to be reflected in rising bond yields than in falling equities. Markets undergo several phases of transition according to the shifts of Fed policy, but one thing is clear is that neother the flow of asset purchases nor the decline in the unemployment rate will ever go in a straight line.
Ashraf's 4-year comparative performance charting of 11 currencies, 7 equity indices, & 14 commodities for Premium Insights members.
- What was the best performing currency in 2012?
- How to find out w/out making several cross-FX comparisons?
- What conclusion to draw from Aussie's performance relative to CAD & JPY?
- How copper fared vs against gold and crude?
- Coffee, cotton and corn are also included, as well as FTSE-100, S&P500 and the Nikkei-225.
FIND OUT HERE: http://ashraflaidi.com/forex-news/comparative-intermarket-performances-from-2009-to-2012
It does not matter the Bank of Japan will raise rates to a 30-year high. It also unlikely to cause a violent unwiding of the carry trade as was the case in August 2024? Why? First of all, Friday's 25-bp hike in the overnight rate to 0.75% is widely anticipated and will not be a surprise as in August 2024. Also remember, we had a rate hike in January, which was harmless in scale and in anticipation. Secondly, stock markets are well below their highs, meaning they're not at their peaks as was the case in August 2024, when they were vulnerable to any pricking from the Japanese needle. BoJ Governor Ueda, shall temper market fears, by indicating that the new 0.75% rate is well below the neutral rate, which is around 1.0%. This means 0.75% is not at all hawkish. If anything, it remains too low. Once Ueda asserts this point, while assuring no rush in future rate hikes --markets are likely to take it in stride. TIMINGS: BoJ announcements are usually between 3-4 am GMT, followed by the important press conference around 4.5 hrs later.
EURGBP & Bank of England
Today's weaker than expected UK CPI sharply boosted EURGBP and dragged down GBPUSD on improved expectations the BoE will cut rates tomorrow (Thursday).
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Uncertain December
The oscillating changes in market expectations for the December FOMC meeting implies more volatility into the next 4 weeks.
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