Sterling weakens, BoE minutes fail to bolster rate hike expectations

By Anirban Nag

LONDON, July 23 (Reuters) – Sterling fell from near two-year highs against the euro on Wednesday and struck a three-week low versus the dollar after minutes from this month’s Bank of England policy meeting were less hawkish than some in the market had anticipated.

The minutes showed that BoE officials discussed whether there was a case for an early interest rate rise, but there were concerns about hurting the recovery. The nine members of the Monetary Policy Committee voted unanimously to keep interest rates on hold, as forecast by economists in a Reuters poll.

BoE Governor Mark Carney said in a speech in Glasgow that subdued wages suggested more slack in the labour market than previously though, although he added that spare capacity in the economy was being used up quickly. All of which did little to alter expectations for rate hikes later this year.

Sterling bulls cut positions and the pound fell to a three-week low of $ 1.7024 after Carney’s speech and the minutes, down 0.2 percent on the day. The pound has of late struggled to rise towards recent six-year highs as investors await more evidence of a broad-based recovery that would bring forward rate hike expectations.

The euro reversed earlier losses to turn higher on the day against the pound. It stood at 79.10 pence, recovering from a 23-month low of 78.74 pence.

“(The minutes) left markets a little disappointed and the pound has fallen,” said Alex Edwards, head of the corporate desk at UKForex. “But we don’t believe it’s so disappointing as to force sterling below $ 1.70. It hasn’t changed the views of the hawks who have a rate hike priced in for later this year.”

Sterling has risen more than 10 percent on a trade-weighted basket of currencies mainly on expectations that the BoE will be the first major central bank in the West to tighten monetary policy. Investors are pricing in the chance of the first move before the end of this year.

DIVERGING RATE PATH

Earlier in the day, the pound marched to a 23-month high versus the euro as hedge funds and speculators sold the single currency. They were betting that euro zone monetary policy would stay loose and on a growing view that possible tougher new sanctions on Russia would hurt fragile growth in the euro zone.

Europe’s largest economy Germany has strong trade links with Russia. In contrast to expectations of a rate hike in the UK, the euro zone’s interest rates were slashed in June and the European Central Bank has left open the possibility of further monetary loosening – possibly through quantitative easing.

“On our view, the market may have got a little ahead of itself in pricing in BoE rate hikes,” Rabobank said in a note. “However, irrespective of exactly when the BoE first hikes, it is bound to be ahead of the very dovish ECB. We expect euro/sterling to trend lower towards 77 pence.”

Traders said the focus will now be on UK retail sales on Thursday and the first reading of second-quarter growth data on Friday. Stronger UK data and a weaker German IFO survey on Friday could push euro/sterling lower, Citi said in a note. (Reporting by Anirban Nag; Editing by Catherine Evans)

GLOBAL MARKETS-Asia stocks follow Wall Street up, euro probes lows

* Record closing high on Wall Street lifts Asia

* Yellen comments seen as hawkish, buoys dollar

* Euro nears 5-month low versus dollar

By Shinichi Saoshiro

TOKYO, July 17 (Reuters) – Asian equities gained on Thursday, lifted by another record-high close on Wall Street, while the euro probed recent lows against the dollar amid speculation the U.S. Federal Reserve is tilting toward tighter monetary policy in light of a stronger economy.

MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.2 percent.

Tokyo’s Nikkei gained 0.3 percent, helped by a weaker yen.

The Dow closed at a record high on Wednesday, boosted by merger news involving an offer by Twenty-First Century Fox Inc to buy Time Warner Inc and strong earnings from blue chips such as Intel Corp.

“Investors had doubts about further gains in the U.S. stock market after momentum shares fell yesterday. We were prepared to see a correction in the U.S. market,” said Takatoshi Itoshima, chief portfolio manager at Commons Asset Management in Tokyo.

“But such M&A and partnership deals have energised sentiment and boosted confidence.”

The dollar was higher against some peers following disappointing economic reports in Europe and comments by Federal Reserve Chair Janet Yellen before this week that suggested rate hikes may come sooner than expected with the economy showing signs of a recovery taking hold.

The dollar traded little changed at 101.56 yen having gained about 0.4 percent so far this week against the Japanese unit.

The euro stood at $ 1.3531, not far from a one-month low of $ 1.3520 hit the previous day.

Data suggesting a shaky start for Germany in the new quarter and underlying wariness about banking problems in Portugal have kept the euro on the back foot this week.

In focus was whether the euro could hold above the $ 1.35 threshold, which if breached would take the single currency to a five-month trough.

Kathy Lien, managing director at BK Asset Management, said it was important to recognise fundamental reasons the euro refused to break $ 1.35, such as U.S. yields in a downtrend, a massive current account surplus, and benefits from the diversification of currency reserves.

“Therefore, without a significant rally in U.S. yields or a strong signal from the ECB that further easing is imminent, a move below $ 1.35 could be fake-out instead of a breakout,” she wrote in a note to clients.

U.S. Treasury yields, seen as central to the dollar’s appeal in currency markets, were initially higher on Wednesday but later slipped.

In the monetary policy landscape, the euro zone stood in stark contrast to the UK, where expectations are for a rate hike later this year.

Reflecting such a gap in expectations, the euro hovered near 78.88 pence touched on Wednesday, a level not seen since September 2012.

In commodities, U.S. crude oil extended gains after rising more than $ 1 the previous day after government data showed a sharp fall in U.S. crude stocks last week.

U.S. crude was up 0.3 percent at $ 101.53 a barrel.

Aluminium held steady after touching a 16-month high on Wednesday in light of upbeat data from top consumer China amid producer cutbacks and eroding inventories.

Benchmark three-month aluminium on the London Metal Exchange was up 0.1 percent at $ 1,971 a tonne after surging to $ 1,993 on Wednesday, the highest since March 2013.

Shanghai copper fell to its lowest in a fortnight as jitters over a possible bond default in China’s construction sector triggered a round of profit taking.

The most-traded September copper contract on the Shanghai Futures Exchange slid 1 percent to 50,050 yuan ($ 8,100)a tonne in overnight trade.

($ 1 = 6.2035 Chinese yuan) (Additional reporting by Ayai Tomisawa in Tokyo; Editing by Eric Meijer and Jacqueline Wong)

German Bunds fall after Fed's George says wants rate hikes

* Germany 10-year yields bounce off year’s lows

* Fed’s George says hikes could be steeper than expected

* Euro zone bonds retreat capped by ECB easing outlook (Adds detail, moves in other euro zone bonds)

By Emelia Sithole-Matarise

LONDON, May 30 (Reuters) – German bond prices fell on Friday, tracking a decline in U.S. Treasuries after Federal Reserve policymaker Esther George said rate rises should be steeper than many in the market expected.

The Kansas City Federal Reserve Bank President reiterated her view that the Fed should start to raise rates shortly after it ends its current round of bond purchases or quantitative easing programme.

The Fed is on target to phase out bond buying completely by the autumn but Fed Chair Janet Yellen has said short-term interest rates will stay at their near-term zero level for a considerable time afterwards, and will then rise only gradually.

“The market is pricing in a very benign interst rate cycle in the U.S. but whilst Yellen seems to be on the dovish front, George is signalling some members of the Fed are less dovsih going forward,” RIA Capital Markets strategist Nick Stamenkovic said.

“The difference among policymakers should become marked once the Fed completes QE and that could start unnerving the market.”

German 10-year yields, the benchmark for euro zone borrowing, were up 2 basis points (bps) at 1.32 percent, mirroring a similar rise in yields on U.S. 10-year notes.

Traders said George’s comments were prompting some investors to book profits after a sharp across the board rally in euro zone bonds this week which drove German yields to a year low of 1.28 percent and peripheral yields back to historic troughs.

The retreat was, however, capped by expectations that the European Central Bank will deliver further monetary stimulus at its meeting next week after several policymakers signalled the bank was primed to act to foster the region’s economic recovery.

Investors were also focused on preliminary inflation data from Spain and Italy due later in the day, with any downside surprises expected to put further pressure on the ECB next week.

“Downside inflation surprises could well see Bunds push through recent lows and sustainably lower than the 1.30 percent mark in 10-year Bunds,” RBS strategists said in a note.

Yields on Italian and Spanish 10-year bonds held steady at 2.91 and 2.87 percent respectively, not far from record lows hit this week while Portuguese yields edged up 3 bps to 3.66 percent.

(Editing by Louise Ireland)

FOREX -Euro steady before Draghi's speech, rate hike helps NZ dollar

* Kiwi rallies after NZ central bank signals more rate hikes

* Euro awaits speech by head of ECB, German IFO

* Yen firm as Tokyo shares slip on lack of US-Japan trade pact (Recasts, adds comments)

By Anirban Nag

LONDON, April 24 (Reuters) – The euro struggled to make headway on Thursday amid caution before a speech by ECB President Mario Draghi, while the New Zealand dollar rose after the central bank raised interest rates and signalled more tightening.

After two days of gains, the euro was steady at $ 1.3825 , leaving it a shade firmer on the week. It could take some cues from the German Ifo survey due at 0800 GMT, but most of the focus will be on Draghi’s speech, scheduled for 0900 GMT.

On Wednesday a survey showed the euro zone private sector started the second quarter on its strongest footing since 2011.

But hedge funds and speculators are betting against the euro as Draghi has warned the European Central Bank will ease policy further if the currency keeps strengthening, including the option of quantitative easing.

Other members of the ECB’s Governing Council have also been vocal about the need to rein in euro strength, which has contributed to subdued inflation in the euro zone.

“The upcoming speeches by President Draghi and his Governing Council members (Klaas) Knot and (Vitor) Constancio today and tomorrow could highlight the ECB’s determination to fight low inflation and, by implication, further euro appreciation,” said Valentin Marinov, currency strategist at Citi.

“All that could keep euro bulls at bay for now.”

There have been other factors behind the euro’s strength, including renewed inflows into euro zone peripheral bonds and stocks; and the fact that euro zone banks are repaying cheaper loans to the ECB, shrinking its balance sheet at a time when the Federal Reserve and the Bank of Japan are expanding theirs.

Also, many euro zone banks have been cutting their presence abroad, selling assets and repatriating money to meet capital and stress test requirements. The capital inflows allow the euro zone to maintain a healthy current account balance and support the common currency.

KIWI RISES

The New Zealand dollar climbed to a one-week high of $ 0.8638 after the country’s central bank said it would continue to tighten policy to stay on top of inflationary pressures. As expected, it hiked its cash rate to 3.0 percent from 2.75 percent.

Some in the market had thought it might signal a slowing in the pace of future rate hikes given a stubbornly strong currency and still moderate inflation. Still, analysts said further gains in the kiwi might be limited.

“We believe further NZD appreciation is likely to be capped within a cent of current rates as the tightening cycle is fairly priced,” said Annette Beacher, head of Asia-Pacific research at TD Securities in Singapore.

The New Zealand dollar last traded at $ 0.8620, up 0.4 percent on the day.

The safe-haven yen rose against the dollar as Tokyo shares fell nearly 1 percent, after Japanese Prime Minister Shinzo Abe said that a trade deal with the United States had not been finalised yet.

Mollifying Japan’s powerful farming lobby and completing a successful trade pact is seen as a key test of whether Abe can deliver the “third arrow” – structural reform – to go with two others that have already been deployed: fiscal and monetary stimulus measures.

The dollar last fetched 102.35 yen, down 0.2 percent.

(Additional reporting by Masayuki Kitano; Editing by John Stonestreet)

FOREX-Kiwi flies on hawkish RBNZ, euro eyes ECB speech

* Kiwi rallies after RBNZ signals more rate hikes ahead

* Other major currencies remain stubbornly subdued

* Euro awaits speech by head of ECB

By Ian Chua

SYDNEY, April 24 (Reuters) – The New Zealand dollar rallied on Thursday after the country’s central bank lifted interest rates and signalled more hikes ahead, while caution ahead of a speech by the European Central Bank kept the euro subdued.

The kiwi climbed more than a third of a U.S. cent to a high of $ 0.8626 after the Reserve Bank of New Zealand (RBNZ) said it would continue to tighten to stay on top of inflationary pressures. As expected, it hiked its cash rate to 3.0 percent from 2.75 percent.

Some in the market had thought it might signal a slowing in the pace of further rate hikes given a stubbornly strong currency and still moderate inflation.

The kiwi though steadied at $ 0.8611, with analysts saying further gains might be limited.

“We believe further NZD appreciation is likely to be capped within a cent of current rates as the tightening cycle is fairly priced,” said Annette Beacher, head of Asia Pacific research at TDSecurities in Singapore.

The kiwi also rose against the yen, euro and its Australian counterpart, which suffered heavy losses on Wednesday in the wake of unexpectedly soft inflation data.

Both Antipodean currencies were among some of the biggest movers this week, in contrast to the G3 currencies which stayed in all-too familiar territory.

The U.S. dollar index last traded at 79.845 after ending little changed on Wednesday. It had dipped to a near one-week low of 79.698 but recovered almost all of its losses to be nearly flat on the week.

The euro was stuck at $ 1.3820 after pulling back from a near one-week high of $ 1.3855, leaving it just a shade firmer on the week.

Traders said the common currency could struggle ahead of a speech by ECB President Mario Draghi, although they conceded that it would be hard for him to sound any more dovish.

His speech comes a day after a survey showed the euro zone private sector started the second quarter on its strongest footing since 2011.

Also, Draghi has already said the bank will ease policy further if the euro keeps strengthening, although he has been vague on the timing.

Against the yen, both the dollar and euro have been confined in slim ranges this week. The greenback was last at 102.48 , having drifted either side of 102.50. The euro fetched 141.61 yen and appeared reluctant to stray too far from 141.70.

There is little in the way of major economic news out of Asia on Thursday.

On Friday, inflation data out of Japan will be closely watched. Core consumer prices in Tokyo are expected to have risen by the most in 22 years in April, driven by an increase in the country’s sales tax.

(Editing by Richard Pullin)

Euro: Should We Worry About Demands for More Currency Intervention?

Talking Points:

  • Dollar Advance Stalls as Yellen Comments and Beige Book Chewed
  • Euro: Should We Worry About Demands for More Currency Intervention?
  • British Pound Rallies on Strong Jobs Data, But Not Enough for Next Bull Leg

Dollar Advance Stalls as Yellen Comments and Beige Book Chewed

With Friday’s liquidity drain closing in, the dollar is focusing even more intently on the ebb and flow in interest rate expectations for its bearings. Against its major counterparts, the greenback moved higher against all but the pound and Australian dollar – both currencies charged by heavier fundamental catalysts. Though generally higher on the day, the lack of conviction would mean the equally-weighted Dow Jones FXCM Dollar Index (ticker = USDollar) would break its three-day rally with a 0.1 percent slide. Yet, if moderation is the course ahead and a rebound in Treasury yields is the course, the greenback may find itself relatively unimpeded in a slow rebound through week’s end.

Market conditions are of critical importance to trading through the final 48 hours of the week. With the a good portion of the speculative world offline Friday (North American, European and Australian markets amongst others), the appetite to take large positions will be low – and the ability to feed momentum behind new trends will be even lower. Under such circumstances, we are more likely to see positions unwound than new ones established; which in turn may pull pairs like EURUSD and GBPUSD back into ranges. In the meantime, monetary policy forecasts will continue to shape the dollar’s bearings. This past session, a Fed Chair Janet Yellen anchored a round of central bank speeches that resulted in a broadly ‘status quo’ outcome. The Fed’s Beige Book – the districts’ economic assessments used for policy decisions – was issued with a tangible optimistic lean for growth and employment evaluations. How did the market read it? Treasury yields were little changed on the day but swap rates extended their gains. Ahead, we have jobless claims and a 5-year TIPS (inflation-protected Treasury) sale to digest.

Euro: Should We Worry About Demands for More Currency Intervention?

Verbal threats against the euro seem to grow by the day. French Economy Minister Arnaud Montebourg remarked in an interview Wednesday that he wanted Eurozone members to meet in the near future to discuss the high level of the euro and evaluate monetary policy. While this is unlikely to result in actual change or a threat to the ECB’s independence, it is a reflection of the pressure that the central bank is under to curb the strength of its currency and fight a downtrend in inflation pressures. We were reminded of weak price growth today with the final readings of the region’s CPI figures. Expected to remain unchanged, the core figure actually ticked down to match a record low 0.7 percent reading. The likelihood of the central bank either cutting rates or introducing new unconventional policy in the near-term is growing. The question is whether this will curb the inflow of speculative capital and take the pressure off 1.4000 for EURUSD and policy officials.

Market conditions change, and our strategy should reflect those changes. We have coded the DailyFX-Plus strategies for Breakout, Range and Momentum to adapt to these market shifts.

British Pound Rallies on Strong Jobs Data, But Not Enough for Next Bull Leg

The UK inflation statistics Tuesday were met by a distracted and tepid pound response. That ultimately worked in bulls’ favor as the data further undermines expectations for an earlier rate hike by the Bank of England considering headline CPI slowed to its weakest pace since October 2009. Where unfavorable data was downplayed, the market would leverage the impact of the positive news this past session. Jobless claims for March dropped by 30,400 – generally in-line with expectations – but the ILO unemployment rate for February unexpectedly dropped 0.3 percentage points to a five-year low 6.9 percent. Yet, when it comes to jobs versus inflation – the latter typically necessitates rate hikes.

Canadian Dollar Modestly Weaker after BoC Rate Decision

Bank of Canada Governor Stephen Poloz left monetary policy untouched – as expected – at the most recent rate decision. However, the dovish lean remained in the central banker’s commentary. A reiteration that the door couldn’t be shut on possible future rate cuts positions the loonie well below the current bearings of the BoE, Fed and even the ECB. Ahead, Canada’s docket holds one of the few meaningful releases left amongst the G10 – March CPI figures. Poloz said any near-term inflation spikes would be transient . Let’s see if that warning was needed.

New Zealand Dollar: Swaps Still Show Certainty for RBNZ Hike, But Kiwi Isn’t Advancing

Is the Kiwi already pricing in an aggressive pace of rate hikes from the RBNZ going forward? Despite the weaker-than-expected 1Q CPI reading released earlier in the week (1.5 percent, where the target zone is 2 to 3 percent), swaps show a 97 percent probability of a follow up rate hike at the central bank’s next policy gathering next Wednesday. That said, government bond yields are floundering against a trend of lower foreign holdings and the New Zealand currency is trading lower. Can the market fully price an additional 200 bps worth of hikes this far forward?

Chinese Yuan Firms Slightly after Premier Li Says No Stimulus

For speculators, one of the silver linings of the notable cooling in the Chinese economy as of late is the potential for fresh stimulus that creates inefficiencies to invest around. Yet, following the soft 1Q GDP figures, Chinese Premier Li Keqiang stated this morning that there are no plans to consider large stimulus programs at the moment. The desire to balance the financial leverage in credit growth with the threat of stall-speed economic activity finds officials acting with restraint. This can significantly dampen the global expectations for high returns.

Emerging Market Rebound in Market Calm, Real Tumbles and Ruble Rallies

Emerging market capital markets recovered some of the ground they lost on Tuesday. However, there was a notable lack of conviction in the bounce in both price and volume. For the MSCI ETF, the 0.5 percent rebound was founded on less than half the volume of the previous day’s tumble. Looking at the rankings for the currencies, the Brazilian real suffered the biggest loss on the day (0.5 percent vs the dollar) on reports authorities may end their support of the currency. A 0.5 rally for the Ruble reflected tempered fears of an escalation over the Ukraine.

Gold Loses Momentum and Volume

A slow but steady bearing for the US dollar and balance in risk appetite across global financial markets equates to an unfavorable backdrop for the world’s ‘alternative asset’ – gold. The metal was virtually unchanged on the day despite a broad trading range through the period. Volume in the derivatives market reflects the lack of impetus. The SPDR Gold Shares ETF recorded turnover two-third of the month’s average. On a participation-basis, open interest in gold futures is slowing picking back up from its five-year low set earlier in the month. **Bring the economic calendar to your charts with the DailyFX News App.

ECONOMIC DATA

GMT

Currency

Release

Survey

Previous

Comments

1:30

AUD

New Motor Vehicle Sales (MoM) (MAR)

0.1%

As we approach the holiday weekend and ahead of Australians CPI next Wednesday, we may see volatility in AUD crosses slow as the week comes to a close.

1:30

AUD

New Motor Vehicle Sales (YoY) (MAR)

-3.5%

1:30

AUD

NAB Business Confidence (1Q)

8

1:30

AUD

RBA Foreign Exchange Transaction (A$ ) (MAR)

369M

1:30

AUD

RBA FX Transaction- Government (A$ ) (MAR)

-403M

1:30

AUD

RBA FX Transaction- Other (Australian dollar) (MAR)

55M

5:00

JPY

Consumer Confidence Index (MAR)

38.3

Although the head of the BoJ said that demand had not fallen off as sharply as expected in regards to the recent tax hike, March data will be key to assessing the true underlying impact of the hike.

5:30

JPY

Nationwide Department Store Sales (YoY) (MAR)

3.0%

5:30

JPY

Tokyo Department Store Sales (YoY) (MAR)

3.9%

6:00

EUR

German Producer Prices (MoM) (MAR)

0.0%

0.0%

After the EZ composite final reading came in a tenth of a percent below estimates, market participants are likely wary about CPI data not only out of Germany, but EZ as a whole in April. As the Euro fails to make higher highs, bulls may begin to feel the pressure build ahead of April CPI figures.

6:00

EUR

German Producer Prices (YoY) (MAR)

-0.7%

-0.9%

6:00

EUR

EU 25 New Car Registrations (MAR)

8.0%

8:00

EUR

Euro-Zone Current Account s.a. (euros) (FEB)

25.3B

8:00

EUR

Euro-Zone Current Account n.s.a. (euros) (FEB)

6.4B

12:00

EM

Russia Unemployment (MAR) (Emerging Markets)

Emerging market health is a key measure to a broad ‘risk’ assessment and frequent fodder for developed world monetary policy

12:00

EM

Brazil Jobless Rate (MAR) (Emerging Markets)

12:30

CAD

Consumer Price Index (MoM) (MAR)

0.4%

0.8%

Following the Bank of Canada yesterday, the central bank expects inflation to remain transitory as CAD weakness has helped boost CPI. With the Canadian Dollar hitting highs this week not since January, March figures may come in a tad light. Any data at or below expectations could prompt further USDCAD buying.

12:30

CAD

Consumer Price Index (YoY) (MAR)

1.4%

1.1%

12:30

CAD

Bank Canada CPI Core (MoM) (MAR)

0.3%

0.7%

12:30

CAD

Bank Canada CPI Core (YoY) (MAR)

1.3%

1.2%

12:30

CAD

Consumer Price Index s.a. (MoM) (MAR)

0.3%

12:30

CAD

Consumer Price Index Core s.a. (MoM) (MAR)

0.2%

12:30

CAD

Consumer Price Index (MAR)

124.1

12:30

USD

Initial Jobless Claims (APR 12)

315K

300K

Jobless claims came in at one of the lowest levels post-crisis last week, but price action in FX continues to remain limited in the face of uncertainty in US equity markets.

12:30

USD

Continuing Claims (APR 5)

2776K

14:00

USD

Philadelphia Fed. (APR)

10

9

23:50

JPY

Tertiary Industry Index (MoM) (FEB)

0.1%

0.9%

The last print was the best since May.

SUPPORT AND RESISTANCE LEVELS

To see updated SUPPORT AND RESISTANCE LEVELS for the Majors, visit Technical Analysis Portal

To see updated PIVOT POINT LEVELS for the Majors and Crosses, visit our Pivot Point Table

CLASSIC SUPPORT AND RESISTANCE

INTRA-DAY PROBABILITY BANDS 18:00 GMT

v

— Written by: John Kicklighter, Chief Strategist for DailyFX.com

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The information contained herein is derived from sources we believe to be reliable, but of which we have not independently verified. Forex Capital Markets, L.L.C.® assumes no responsibility for errors, inaccuracies or omissions in these materials, nor shall it be liable for damages arising out of any person’s reliance upon this information. Forex Capital Markets, L.L.C.® does not warrant the accuracy or completeness of the information, text, graphics, links or other items contained within these materials. Forex Capital Markets, L.L.C.® shall not be liable for any special, indirect, incidental, or consequential damages, including without limitation losses, lost revenues, or lost profits that may result from these materials. Opinions and estimates constitute our judgment and are subject to change without notice. Past performance is not indicative of future results.

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Yellen’s Vague Fed Driving Aussie Volatility, CBA’s Capurso Says

The Australian dollar’s implied volatility may rise along with that for the euro and New Zealand’s kiwi because the Federal Reserve’s interest-rate guidance lacked clarity, Commonwealth Bank of Australia said.

The Federal Open Market Committee this week severed a link between the benchmark rate and a specific level of joblessness, saying its assessment takes into account a “wide range of information,” including the labor market, expectations of inflation and financial markets. Fed Chair Janet Yellen signaled the key rate may rise by the middle of next year. The lack of clarity may increase currency volatility for some pairs and boost risk aversion, Joseph Capurso, a Sydney-based currency strategist at Commonwealth Bank, wrote in a note yesterday.

“The vagueness of the new guidance means there is potential for markets to ‘over-react’ in coming months by bringing forward the pricing for funds rate hikes and/or price additional funds rate hikes over and above what FOMC policy makers want,” he wrote. “Increased uncertainty about the FOMC’s reaction function may lead to more volatility in asset markets, including higher implied volatility on U.S. dollar pairs,” such as the Aussie, kiwi and euro, he wrote.

Australia’s dollar was little changed this week at 90.37 U.S. cents as of 10:59 a.m. in Sydney. It fell 0.9 percent on the day of the Fed decision. One-month implied volatility in the currency was at 9.03 percent, compared with last year’s high of 15.5 on June 24, which came after the previous Fed chairman signaled a dialing back in stimulus may be near.

New Zealand’s dollar is also little changed this week at 85.30 U.S. cents while the euro has declined 1 percent to $ 1.3779.

‘Taper Tantrum’

“The Fed’s vagueness has the potential to cause another bout of market risk aversion along the lines, but less sharp, as the May-September 2013 ‘taper tantrum’,” Capurso wrote.

Then-Fed Chair Ben S. Bernanke suggested May 22 that policy makers may taper the amount of money they pump into the economy, causing the U.S. dollar to strengthen as bond yields climbed and riskier assets sold off.

The Aussie has risen 1.4 percent this year against major developed peers, following a 13 percent drop in 2013, according to Bloomberg Correlation Weighted Indexes. The kiwi is up 4.1 percent since Dec. 31 and the euro has gained 0.2 percent.

To contact the reporter on this story: Candice Zachariahs in Sydney at [email protected]

To contact the editors responsible for this story: Garfield Reynolds at [email protected] Masaki Kondo

Polish zloty falls on lower chances for more rate hikes – CNBC

WARSAW, May 9 (Reuters) – The Polish zloty fell 0.5 percent against the euro after the central bank Governor Marek Belka played down chances for another interest rate hike following the surprising increase in the cost of credit on Wednesday. The zloty …

Hotel rates in Munich rise up to 1272 percent for Champions League Final – eTurboNews


eTurboNews

Hotel rates in Munich rise up to 1272 percent for Champions League Final
eTurboNews
However, because demand far exceeds supply, they're implementing exorbitant rate hikes. One case in point is the NH Munchen am Ring. This 3-star accommodation is situated 4 km from Munich's city centre. Rooms at this establishment regularly go for Euro

and more »