Maintaining Fiscal Stability

(Reuters) - Copper rose 1 percent in moderate volume on Monday as demand prospects improved after the Chinese premier called for extra efforts to support growth in the world's top metals consumer. "We should continue to implement a proactive fiscal policy and a prudent monetary policy while giving more priority to maintaining growth," Premier Wen Jiabao said on Sunday. The supportive comments attracted more interest from copper investors, many of whom had already been buying in the market after prices collapsed last week to their lowest in four months. "China has already been stimulative this year, and to say that they will be more stimulative or will continue to be stimulative is a positive," said Adrian Day, president at Adrian Day Asset Management, which has $165 million in assets. " ...

The Draghi press conference didn't provide much in the way of direction for euro-based assets, yet EURUSD had one of its most volatile afternoons in days. The pair was 1.3100 when Draghi first started speaking. By the time he had finished EURUSD was up 70 points. The ECB didn't shift its stance and it didn't sound any more dovish than it did the last time it met so why the big move in the euro? The reason is down to rate differentials. Draghi didn't cause the rate differential between the currency bloc and the US to narrow as some had expected, which is euro positive in the short-term. In the long-term the ECB's policy stasis is euro negative especially as the sovereign debt crisis continues to rage and growth in Spain may get worse before it gets better. But the market is unlikely to ...

FOMC Preview: No Further QE Wednesday will be the final day of the two-day-long FOMC meeting being held this week. The meeting will provide an FOMC statement and new economic projections followed by a press conference from Ben Bernanke. We expect the statement to repeat the tone from the March meeting with no change in guidance for the Fed funds rate (exceptionally low until late 2014). The only tweak in language compared with March could be in the reference to oil and gasoline prices which have moderated since early March. The economic projections and the press conference will be more interesting. We expect the projection on the unemployment rate to be lowered while inflation projections could be adjusted slightly higher. We do not expect any signs that the Fed is ...

(Reuters) - Federal Reserve Chairman Ben Bernanke on Tuesday warned Congress that putting off a decision on the fate of expiring Bush administration tax cuts could unsettle businesses and households, undercutting the U.S. economic recovery. With presidential and congressional elections looming in November, many analysts think Congress is unlikely to act until the final months of the year. The tax cuts expire on January 1. Bernanke told the Senate Budget Committee that lawmakers might not have the luxury of waiting. "I don't know exactly when the uncertainty would become a factor, but surely as we get closer to January 1 and Congress has not given a clear road map for how it plans to proceed, that would certainly affect planning, business decisions, household decisions, as they look ...

Last week, optimism dominated the market as European finance ministers met to outline the guidelines for European leaders to create and complete a final and decisive plan to tackle the debt crisis. In addition, the euro-area manufacturing and services sector improved more than expected and finally the Federal Reserve pledged to hold rates as they are until late 2014 in order to support growth, which supported the sentiment to remain positive through the week, adding more strength to the European common currency. This week eyes will be focused on the European summit as European leaders will start their meeting on Monday to discuss and create a plan to tackle the debt crisis and prevent the contagion from spreading further, where this meeting is very critical and all markets will be ...

Last week, optimism dominated the market as European finance ministers met to outline the guidelines for European leaders to create and complete a final and decisive plan to tackle the debt crisis. In addition, the euro-area manufacturing and services sector improved more than expected and finally the Federal Reserve pledged to hold rates as they are until late 2014 in order to support growth, which supported the sentiment to remain positive through the week, adding more strength to the European common currency. This week eyes will be focused on the European summit as European leaders will start their meeting on Monday to discuss and create a plan to tackle the debt crisis and prevent the contagion from spreading further, where this meeting is very critical and all markets will be ...

Weekly Economic and Financial Commentary : 28/10/2011 U.S. Review Modest Economic Growth Continues Third-quarter GDP rose 2.5 percent, supported primarily by gains in consumer spending and business investment. State and local spending cuts continued to detract from economic growth. Personal incomes grew a slight 0.1 percent in September, with real disposable income declining by 0.1 percent. Even with the slow pace of income growth, consumers increased their spending for the month by 0.6 percent. Housing data this week continued to reflect the slow pace of recovery for the housing industry. The pace of recovery will continue to vary considerably by region. Broad-Based Economic Growth for Q3 The dominant story of the week was the release of the first look at third-quarter GDP, ...

(Reuters) - The U.S. economic recovery remains unsatisfactory in spite of aggressive monetary and fiscal stimulus and recent commodity price rises are likely to be temporary, a top Federal Reserve policymaker said on Tuesday. "The recovery remains distinctly subpar," New York Federal Reserve Bank President William Dudley told a Foreign Policy Association dinner. The "large amount of slack" in the U.S. economy and subdued wages are counterbalancing commodity price gains, said Dudley, who is seen as one of the more dovish members of the Fed's policy-setting committee. "There are good reasons to believe that that commodity prices will not continue to increase at the explosive rate of recent months," he said. One reason is that demand for commodities will fall as households and businesses ...

The Week Ahead Highlights Markets consolidate before The End of the World Greek problems get worse before they get better? The euro hinges on Spain Japan's economy still in a 'very severe' state The Loonie may see weakness ahead Key data and events to watch next week Markets consolidate before The End of the World This past week saw most major asset markets and currencies essentially consolidate around recent lows following the sell-off in the first half of May. Incoming data, however, continues to suggest increasing sluggishness in the major economies. In the US, housing data weakened further, both the Philadelphia and Empire manufacturing indexes declined, industrial production flattened, and the index of leading indicators dropped for the first time in 10 ...