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Euro rebounds from 3-week low, Greek unease remains
(Reuters) - The dollar fell broadly on Wednesday after a report cited Federal Reserve officials saying they are considering a new bond-buying program to support the fragile economic recovery, a move that would undermine the currency's value.
The euro rebounded off a three-week low against the greenback. But its gains were kept in check by the unresolved Greek debt swap deal that still requires bond holders to agree to terms locking in a nominal 53.5 percent loss on their investment.
According to the Wall Street Journal, Fed officials are considering buying bonds while simultaneously borrowing the money it used to buy those bonds for short periods of time at low interest rates in order to limit inflation pressures.
"That is something the market completely thought was an impossibility, ...
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Unintended Consequences
2012 is proving to be the ‘Year of the Central Bank’. It is an exciting celebration of all the wonderful maneuvers central banks can employ to keep the system from falling apart. Western central banks have gone into complete overdrive since last November, convening, colluding and printing their way out of the mess that is the Eurozone. The scale and frequency of their maneuvering seems to increase with every passing week, and speaks to the desperate fragility that continues to define much of the financial system today.
The first major maneuver took place on November 30, 2011, when the world’s G6 central banks (the Federal Reserve, the Bank of England, the Bank of Japan, the European Central Bank , the Swiss National Bank, and the Bank of Canada) announced “coordinated actions to enhance ...
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What the Greek Rescue is Really About
In today’s Daily Reckoning, we’ll do something we can barely stand to do: we’re going to write one more time about Greece. If you can stand to read it, you may come to the same conclusion we reached.
That conclusion is simple: what’s going on Europe has nothing to do with solving a debt crisis and everything to do with preserving a corrupt system based on limitless debt and growing government power. The sooner you understand that fact, the sooner you’ll be able to prepare for what happens next. There are two options for what happens next, and we’ll get to those shortly.
First, though, doesn’t it strike you as strange that all of Europe can be brought to its knees by tiny little Greece? Greek GDP is just 2.4% of Europe’s GDP. In economic terms, Greece doesn’t matter. Its lack of growth or ...
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Euro edges up from two-week low
(Reuters) - The euro edged back from a two-week low on Monday as profit-taking in the dollar offset data highlighting the diverging paths of the U.S. and European economies.
But fears over Greece's progress in completing a debt restructuring deal were expected to keep the single currency under pressure this week. In addition, Chinese Premier Wen Jiabao's reduction in his country's annual growth target to 7.5 percent, the lowest rate in eight years, also highlighted concerns over the global economy.
The Australian and New Zealand dollars, which are closely correlated to global growth, slumped.
China's central bank governor, Zhou Xiaochuan, meanwhile, told the official Xinhua news agency on Monday that it will allow the yuan exchange rate to float in a wider range.
The euro fell to $1. ...
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Insight: Wall Street, Fed face off over physical commodities
Wall Street's biggest banks are locked in an increasingly frantic struggle with the Federal Reserve over the right to retain the jewels of their commodity trading empires: warehouses, storage tanks and other hard assets worth billions of dollars.
While the battle over proprietary trading and new derivatives regulations has taken place largely in public view since the 2008 financial crisis, the fight by JPMorgan Chase, Morgan Stanley and Goldman Sachs to retain or expand their prized physical commodity operations - most acquired in only the past six years - has remained hidden.
The debate is nearing an inflection point: Within 18 months, the Fed will likely either allow banks more freedom to invest in the physical commodity world than ever; or force them to sell off the assets that many ...
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Vietnam's volatile stock market draws money, needs depth
(Reuters) - Vietnam is hoping that falling inflation and rising global risk appetites will spur sustained interest in the country's small stock market, a frontier where many pioneers have been burned.
Cheap valuations and optimism that Vietnam is getting on top of deep economic problems have attracted share-buyers this year.
The country has been one of the world's top performing equity markets so far in 2012. The benchmark index for the main bourse, the Ho Chi Minh City Stock Exchange, was up 20.5 percent through Wednesday.
The big question, though, is sustained performance. the market needs to be broader and deeper to move well away from being an adventuresome roller-coaster ride.
Vietnam's stocks, once a hot frontier market for investors, never fully recovered after the index plunged ...
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Markets dampened by Bernanke, factory data in focus
(Reuters) - Asian shares fell on Thursday as Federal Reserve Chairman Ben Bernanke put the brakes on a recent rally by curbing optimism about the strength of the U.S. economic recovery, but without signaling any further monetary easing to stimulate growth.
Chinese official and private-sector factory data also reminded investors of the fragile state of the global economy, while suggesting Beijing could avoid a hard landing.
"The recent rise in equities was for the most part due to ample liquidity so when expectations for further easing fade, that element will be stripped and may weigh on equities," said Masafumi Yamamoto, chief forex strategist at Barclays Capital.
"At the same time, fundamentals may not be so bad as to warrant further stimulus from monetary easing."
The MSCI Asia ...
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Banks tally up Greek debt insurance payouts
A restructuring of Greece's colossal debt is widely expected to trigger insurance payouts and investment banks and hedge funds are working out who will be the winners and losers.
If the restructuring goes ahead as planned under the terms of Greece's second international bailout, it could involve Athens forcing some bondholders to accept a much lower value.
Credit Default Swaps (CDS) - financial instruments purchased to insure buyers against default - could offer some solace to those banks, fund managers and institutional investors that would see the value of their bonds dramatically cut.
While there is a growing expectation that the CDS will be triggered, question marks over the pay-out process could mean costly surprises for those who must pay up and for those who might be disappointed ...
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€529.53 Take-up in ECBs LTRO
Forex News and Events:
Today’s ECB 3yr LTRO was greater than the market expected and therefore we should expect to see an positive push in risk assets as the cash actually hits the market. This was the highest take up in LTRO history. Earlier there was a slight migration to risk off trades as S&P's decision to downgrade Greek debt to 'Selective Default' rating, caused the ECB to announce that it would temporarily suspend using Greek debt as collateral. Both events have been pretty much priced in, so the correction was short lived. There were also headlines that Germany's Constitutional Court Tuesday ruled it would be unconstitutional for a small sub-parliamentary committee to make decisions on the euro-zone bailout fund. In effect, the decision gave parliament a larger influence in the ...
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