Higher Inflation In Pursuit

Fundamental Analysis EUR "Germany is holding up the rest of the euro zone”" - Nick Kounis, head of macroeconomic research at ABN Amro Germany helped the Eurozone avoid its second recession in three years. Overall gross domestic product stagnated in the first three months of 2012, compared to the previous quarter, Eurostat data showed on Tuesday. USD "There’s a lot of slack in the economy" - Scott Brown, chief economist at Raymond James & Associates Inc. Inflation in the U.S. stagnated in April, restrained by a decline in energy costs. The core consumer price index, which excludes food and energy costs, rose 0.2 per cent, showed Bureau of Labor Statistics data on Tuesday. GBP "March's UK trade figures showed a bit of an improvement, although the external sector still looks likely to ...

(Reuters) - Asian shares rose on Monday as weaker-than-expected U.S. growth data left open the possibility of further monetary stimulus from the Federal Reserve to boost growth, but trading was subdued with Japanese and Chinese markets closed. The dollar remained pressured by Friday's report showing annual growth in the U.S. economy cooled in the first quarter to 2.2 percent, below a 2.5 percent forecast, and concerns about lower fuel demand brought oil prices lower. "A flavor of QE (quantitative easing) is back in the air, driving the U.S. dollar lower and risky assets higher," said Sebastien Galy, strategist at Societe Generale. Asian equities followed the rise in global equities on Friday on the back of strong earnings reports, although Asian growth prospects were clouded as South ...

(Reuters) - The Federal Reserve should start raising interest rates next year, a top Fed official said on Monday, arguing that even if rates stay near zero for many years, U.S. economic output will not bounce back to pre-recession levels. Last month the Fed said it was likely to keep interest rates exceptionally low through late 2014 to bolster a recovery that was moving too slowly. St. Louis Fed President James Bullard said he disagreed with that decision, arguing that the housing collapse means unemployment is likely to stay high and labor markets will improve only slowly even if rates are kept low for many years. Bullard, who does not have a vote on the Fed's policy-setting Federal Open Market Committee this year, is seen as a policy centrist. "It's important to start to remove ...

Forex News and Events: After ending last week in depressed fashion, risk sentiment took another knock this morning after reports that a magnitude 6.0 aftershock shook Christchurch in New Zealand causing unspecified damage to the city centre. Understandably, NZDUSD plunged from 0.8215 to low 0.8100 levels; with the price action exacerbated by the Australian public holiday and generally poor liquidity. The data calendar for the majors is incredibly light today, with most of Europe also out of the office this morning. Nevertheless, the remainder of the week promises both the BoJ and SNB’s latest interest rate decisions, as well as some key inflation data from the UK and Europe. First up, the BoJ is expected to maintain interest rates at ultra-low levels between 0.00% and 0.10%; but after ...

Forex News and Events: The second reading of US Q1 GDP was somewhat disappointing; consensus estimates were looking for upward revisions to 2.2% QoQ annualized, but instead the figure remained at the originally reported level of 1.8%. Softer growth in real consumption appears to have been the main reason this reading fell short of expectations, but overall the results confirmed a soft start to 2011 growth which predictably led to a rally in US fixed income and widespread USD weakness. In turn we have seen USDCHF collapse to new all time lows of 0.8533 and EURCHF hit a record low of 1.2166. This latest move will only compound problems for the SNB, who have already been vocal in their disapproval at prevailing CHF strength. Currency appreciation acts as a form of monetary tightening, and ...

What, exactly, is economic capital? It is the productive potential of the economy, the ability to make things that people need and want to consume. But unlike paper, capital does not grow on trees. Capital itself must first be produced, in the form of capital goods. Let’s start from the beginning: We all need to consume food. Few of us produce our own. So we need to purchase food with our earnings. When we go to the supermarket and purchase a trolley of food, we are purchasing the output of a mind-bogglingly complex productive process. To highlight just a few aspects of this, consider: * Arable land requires regular attention to remain productive, including irrigation, soil and fertilizer treatments; * Irrigation is only partially provided by natural rainfall and drainage. An ...

What does it mean? The chart above shows that the 30-year Treasury bond yield is now higher than the interest rate on 30-year mortgages. What does it mean? The answer is not immediately apparent. On the surface, this chart indicates that the average American mortgage-holder is a better credit risk than the US government. After digging a little deeper, the picture doesn’t change very much. The average American mortgage-holder is genuinely trying to repay his debts. The US government isn’t. Treasury bonds remain the global benchmark for safety and reliability. But at the same time, Federal Reserve Chairman, Ben Bernanke, is busy establishing a new global benchmark for dumb ideas. He is busy printing up dollars in the name of dollar stewardship. The man considers it a good idea to ...

It is part religion, part politics. It is a way to voice a lack of confidence in individual freedom, property rights, and free market capitalism. It comes from a yearning for a new socialistic, centrally controlled world that happens to favor the elite who control large financial institutions and corporations, and who also exert powerful influence over politicians of both major political parties. It requires the rubbing out of history when the Constitution limited government power and defined what the U.S. dollar is: a certain weight of silver (and later gold). It is not an investment; it is something that consistently loses purchasing power. It has been created incessantly whenever debt expanded. This elasticity and continual debasement made the use of debt so attractive that nearly ...

UK and euro zone will release important data today concerning inflation and confidence that would give a guide to officials in their pursuit to shore up their economies after the finical tsunami had caused various imbalances. First on our calendar is CPI for the month of October where rate is expected to remain at 3.1%, higher than bank's upper limit of 3%. In November's inflation report that included the latest inflation expectations for the BoE stated that policy makers expect inflation to remain above the target throughout the upcoming year and to drop back again to 1.5% in 2012. These anticipations although underscored fears but it may give evidence the BoE will not expand stimulus before the inflation are back to safe levels. Though, raising interest rate may be an alternative ...