Stevens Surprises Traders

The Australian dollar climbed today, erasing yesterday’s losses versus the US dollar and the Japanese yen and reaching the highest level in six months against the greenback, after the Reserve Bank of Australia surprised Forex traders by keeping its interest rates unchanged. The Australian currency was falling yesterday as a report showed that retail sales fell 0.1 percent (on a seasonally adjusted basis) in December from November. Another reason for the drop was a deteriorating sentiment about the ability of Europe to deal with its crisis. The RBA removed all negativity today by keeping its main interest rate at 4.25 percent, while most analysts were pretty sure that it would reduce the rate to 4 percent. Glenn Stevens, Bank’s Governor, made another surprise, saying in his statement: ...

Another election day has come and gone, and I for one am happy to see it over with, as I hate all of the political ads and phone calls during the heat of the election cycle. My wife and I went to the polling place together after dinner last night and the workers said the turnout was a bit better than usual for a mid-term election. The currency markets were a bit mixed yesterday, as the higher yielding currencies did well versus the US dollar ahead of today’s FOMC announcement. The euro (EUR) also moved up a bit in spite of renewed worries about sovereign debt. More on the currency markets in a bit, but I will start today’s Pfennig with the two big stories of the day. The elections held little surprises with Republicans taking back control of the house and narrowing the Democratic majority ...