GrowthAces

GrowthAces

EUR/USD: Fed balance sheet unwinding is largely priced in We expect the Committee to announce the gradual normalization of its balance sheet today. Despite lower inflation readings and other headwinds – increased geopolitical risk, fiscal fights in Washington and the unknown economic consequences of the latest natural disasters – Fed officials have, until...

GrowthAces

GBP/USD: Carney signals gradual rate hikes Macroeconomic overview: Bank of England Governor Mark Carney said on Monday that Brexit is likely to hurt Britain's growth prospects in the short term and push up inflation as the country adjusts to life outside the European Union. In a speech that immediately drew criticism from some Brexit supporters who have...

GrowthAces

EUR/USD: Investors shrugged off weaker U.S. retail sales and industrial output data Macroeconomic overview: U.S. retail sales unexpectedly fell in August and industrial output recorded its biggest drop since 2009 as Hurricane Harvey disrupted activity, suggesting the storm could dent economic growth in the third quarter. Harvey, which lashed Texas in the last...

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Macroeconomic overview Centrist Emmanuel Macron solidified his status as frontrunner in France's presidential election on Monday in a televised debate during which he clashed on immigration and Europe with his main rival, far-right leader Marine Le Pen. A snap opinion poll showed Macron was seen as the most convincing among the top five contenders in a marathon...

GrowthAces

EUR/USD: Less hawkish Fed and Dutch election supported EUR/USD Macroeconomic overview The Fed delivered its first rate hike of the year – and the third increase since late 2015, when it began to normalize its policy stance. Yesterday’s move was universally expected and completely priced in by financial markets, after the most influential Fed members had all but...

GrowthAces

USD/JPY: BOJ seen standing on hold Macroeconomic overview The Bank of Japan is expected to keep monetary policy steady on Thursday and stress that inflation is nowhere near levels that justify talk of withdrawing massive stimulus, as weak consumer spending casts a cloud over an otherwise healthy pick-up in the economy. Many BOJ officials say they are more...

GrowthAces

EUR/USD: Fed hike is widely expected today, eyes on dot plot Macroeconomic overview The Fed is going to raise rates again today and the move has been well telegraphed. With the futures market pricing in more than a 90% chance that it would raise interest rates, investors' main focus turned to what the Fed's statement on Wednesday will say about the pace of hikes...

GrowthAces

BOE to stay cautious as economy is slowing On Thursday, 16 March, the Bank of England simultaneously publishes the MPC’s monetary policy decision and the MPC minutes from its meeting. We expect the MPC to vote unanimously to leave the stance of monetary policy unchanged. The background to the March meeting is the February Inflation Report, when the BoE...

GrowthAces

Fed is feeling that it is getting too far behind the curve The Fed is going to raise rates again at the upcoming meeting. And the move has been well telegraphed. Within only a few days, the Federal Reserve completely turned market expectations around and prepared investors for a March rate hike (the odds for a March hike implied by fed funds futures are currently...

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Macroeconomic overview The ECB left all its interest rates unchanged yesterday. Despite accelerating growth and headline inflation, the Governing Council decided to retain the easing bias on interest rates (interest rates will remain “at present or lower levels for an extended period of time”) and to confirm the guidance on asset purchases, including the...

GrowthAces

EUR/USD: Draghi may be less dovish this time We do not expect any new policy announcement when the ECB meets on Thursday. However, following the recent strong improvement in economic data and the jump in inflation to 2%, the ECB is likely to: 1. Raise its GDP and CPI forecasts for this year, although the latter on the back of commodity prices, thus leaving the...

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AUD/USD: We expect neutral RBA statement Macroeconomic overview Data from the Australian Bureau of Statistics out on Monday showed retail sales rose 0.4% in January, in line with market forecasts and up from a 0.1% fall in December. The Reserve Bank of Australia will hold a scheduled meeting on Tuesday against a favorable backdrop: global growth is ticking along...

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EUR/USD: Surprising reaction after hawkish Yellen, now eyes on Draghi Yellen capped off a seemingly coordinated push from the central bank on Friday when she cemented the view that the Fed will raise interest rates at its next meeting on March 14-15, and likely be able to move faster after that than it has in years. She said: "At our meeting later this month, the...

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EUR/USD: Comments from Brainard point to Fed hike in two weeks Macroeconomic overview Fed Governor Lael Brainard said that an improving global economy and a solid U.S. recovery mean it will be "appropriate soon" for the Federal Reserve to raise U.S. interest rates, adding an important voice to the chorus of officials signaling rates may rise as soon as...

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Macroeconomic overview The Australian Bureau of Statistics reported GDP climbed 1.1% qoq in the fourth quarter. That handily topped market forecasts of a 0.7% gain and came as a huge relief after the third quarter's shock 0.5% decline. Growth for the year also surprised at 2.4%, up from 1.9% - an outcome that virtually shuts the door to any further rate cuts this...

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Macroeconomic overview New York Fed President William Dudley, among the most influential U.S. central bankers, said that the case for tightening monetary policy "has become a lot more compelling" since the election of President Donald Trump and a Republican-controlled Congress. He said we have seen a "very large" rise in household and business confidence and "very...

GrowthAces

Macroeconomic overview Many Federal Reserve policymakers said it may be appropriate to raise interest rates again "fairly soon" should jobs and inflation data come in line with expectations, according to the minutes of the Fed's last policy meeting released yesterday. Fed Governor Jerome Powell, one of the voting members at the central bank's last policy meeting,...

GrowthAces

AUD/USD: RBA sees danger in high household debt The head of Australia's central bank Philip Lowe gave the clearest signal yet on Wednesday that further cuts in interest rates would not be in the national interest as the danger of a debt-fuelled boom and bust was just too severe. Lowe noted that high levels of debt combined with subdued wage growth were already...