Tag: central bankSort
What is the Biggest Question in the Markets Right Now?
Now that the S&P rallied over 60 pct since last March 2009, and pretty much all other markets except housing and real estate have also rallied (anything connected to financial markets that received the half of the several $trillion of US and other central bank emergency money infusions beginning big around March 2009) it begs the question when there will be a correction. Or a crash.
Ben Bernanke is making sure the Fed’s exit strategy goes as easily as a camel can pass through the eye of a needle. Instead of choosing to just sell assets and unwind the amount of securities it holds, the Fed chairman is seeking to be creative once again—as he was in the buildup of its balance sheet--and increase the amount of interest it pays on excess reserves.
Crude Oil Prices Take a Dive After a Week of Gains
The U.S. Dollar is trading sharply higher overnight as investors are once again becoming more risk averse. This week, investors are facing three major central bank meetings and the U.S. employment report. Investors are worried about the central banks removing government stimulus, and its possible negative impact on the economy, particularly the financial sector.
Australian Dollar Drags Higher Yielding Currencies Lower
Weakness in the AUD USD is dragging higher yielding currencies lower overnight. This is leading to the call for a stronger U.S. Dollar on the opening. Investors are becoming more risk averse ahead of three major central bank meetings this week. On November 4th the U.S. Federal Reserve holds its FOMC meeting.
Dollar to Rally as Investors Become More Risk Averse
Aversion to risk is helping to put pressure on the EUR USD. A key 50% price at 1.4762 however, has slowed down the rate of the decline. If this area fails to hold, then look for a further decline to 1.4696. Traders are starting to realize that we may be nearing the end of the “easy money” cycle and a shift in sentiment may be taking place.
The U.S. Dollar rose overnight after Fed Chairman Bernanke said the central bank is ready to tighten monetary policy once the economy has “improve sufficiently.” This news triggered a drop in demand for risky assets.
Bernanke also added “We will need to tighten monetary policy to prevent the emergence of an inflation problem down the road.”