USA Banks News

The US dollar jumped on Tuesday and reached its highest level since November versus the Japanese yen as the Bank of Japan has decided to expand its asset purchase program. The Bank of Japan disclosed that the asset purchase program will be increased by 10 trillion yen totaling to 65 trillion yen.

The central bank of Japan also decided to keep the key interest rate unchanged within the range of 0 to 0.1 percent with its temporary inflation target of 1 percent. Currency strategist, Chris Walker from UBS commented, “This is a significant amount of additional easing, and with the BOJ’s preferred measure of core inflation currently running at only -0.1% year-on-year, investors are bound to expect further bouts of monetary accommodation down the road.”

The US dollar gained to 78.49 versus the Japanese yen on Tuesday as compared to 77.60 in Monday’s late trading hours. The eur

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The Reserve Bank has signalled that the next move in interest rates is still likely to be up, not down, but will come later than the midyear it foreshadowed last month.

“Given ongoing uncertainty around global conditions and the moderate pace of domestic demand, it remains prudent to keep the OCR on hold at 2.5 per cent,” governor Alan Bollard said in the bank’s official cash rate review yesterday.

That was a verbatim repeat of what he said in December, apart from dropping the phrase “for now”.

The omission was significant, Westpac chief economist Dominick Stephens said.

“It removes the sense of impending hikes that was conveyed by the December monetary policy statement, which projected a gradual rise in the OCR from around June this year.”

It was broadly the message the market was expecting – a later start to rate hikes but not a marked change in the bank’s stance – and “far less dramatic than the US Federal Reserve’s commitment to keep rates at zero until at least late 2014, which pushed the New Zealand dollar a cent higher this morning”, Stephens said.

ANZ economist Mark Smith said the Federal Reserve’s move effectively gave a green light for a weaker US dollar and by implication a stronger New Zealand dollar.

All else being equal it would allow the Reserve Bank to keep rates low for longer, but it was unhelpful from the standpoint of New Zealand’s need to rebalance towards a more export-driven economy.

Bollard noted the recent rise in the kiwi was reducing exporters’ returns, though export commodity prices remain high.

The high exchange rate is partly the product of improved sentiment in global financial markets.

While Bollard acknowledged improved liquidity in European financial markets – boosted by a large injection of cheap money by the European central bank last month – he repeated warnings of the likelihood of pressure on New Zealand banks’ funding costs over the coming year because of their reliance on offshore wholesale funding.

Smith said ANZ’s analysis suggested elevated funding costs would knock about 1 per cent off growth in New Zealand over the year ahead.

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Interest rates will stay on hold at their record low until 2016, according to a leading forecaster, amid warnings that the UK has already double-dipped back into recession. The Bank of England will be forced to keep the base rate at 0.5pc for another four years. 

Growth under or around 1pc for years to come will force the Bank of England to keep the base rate at 0.5pc, cut to that level in March 2009, for another four years, the Centre for Economics and Business Research (CEBR) predicts.

The think tank believes the UK economy shrank in the last three months of 2011 and is still contracting in the current quarter, marking a recession.

It has slashed its expectations of the UK’s growth for 2012 from the already paltry 0.7pc it forecast in October to a 0.4pc fall. A still more painful contraction of 1.1pc looms if developments in the eurozone take a sharp turn for the worse, the think tank warned.

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Major events that have a significant impact on the trading of the pair GBP/USD for the week ending January 13^th, 2012 are as follows:

On Monday, In United States, member of Federal Open Market Committee, Dennis Lockhart addressed at a public event.

On Tuesday, January 10^th, 2012, British Retail Consortium will publish its report on UK’s retail sales. The country will also report industry data on house price balance while in United States, FOMC member John Williams and Sandra Pianalto will address at an event.

On Wednesday, January 11^th, government data on crude oil stockpiles will be released in United States while US Federal Reserve will publish its Beige Book. Moreover, FOMC member Dennis Lockhart will also address at an event. In United Kingdom, official data on country’s trade balance will be reported.

On Thursday, January 12^th, 2012, government report on manufacturing production in United Kingdom will be released. Mor

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