US dollar mixed after Thai coup; Fed meeting in focus Wednesday, September 20, 2006
NEW YORK- The dollar traded mixed Tuesday as news of a coup in Thailand prompted investors to turn away from risky assets, and traders looking ahead to a Federal Reserve announcement on US monetary policy.
At 2100 GMT, the euro fell to 1.2675 usd from 1.2705 usd late Monday in New York.
The dollar stood at 117.71 yen, compared with 117.91 yen late on Monday.
Reports from Thailand said a state of emergency had been declared after an apparent military coup, with plotters said to have taken control of all six of the kingdom's public television stations, as well as radio stations.
The news sparked selling in the Thai baht and quickly spread to other Asian and Latin American currencies as the news caused investors to curb their risk appetite, with the Australian dollar also falling to a day low of 0.7515 against its US counterpart.
"It's been a long time since the word contagion has been in use but the events in Thailand could prove to be just that if players decide to take risk off the table by taking money off on their other emerging market trades," said Divyang Shah at IDEAglobal.com.
The US dollar benefited from the news meanwhile, erasing some of its earlier losses which came in the wake of weaker-than-expected US housing starts and inflation data which further reduced the chances of the Federal Reserve raising interest rates any further.
Jamie Coleman at Thomson IFR Markets said the trouble in Thailand was likely to spark jitters in financial markets, particularly as the Thai devaluation of July 1997 was the catalyst for the Asian financial crisis.
The initial dollar reaction during that crisis was a period of dollar strength, he noted, followed by a weakening as Asian nations repatriated foreign holdings.
"This present crisis looks contained, but few felt a devaluation by a small country would have such profound impact around the world for more than a year in its wake," he cautioned.
The yen made a sharp recovery after Monday's selloff, which came after the Group of Seven made no specific reference to the Japanese currency.
Ian Gunner at Mellon Financial said the yen saw "a dramatic turn of fortune" after comments by Japanese Finance Minister Sadakazu Tanigaki who dismissed the notion of a secret deal between Japan and the euro zone on exchange rates.
In the United States, the Federal Reserve was widely expected to keep its key interest rate unchanged at 5.25 pct at its meeting on Wednesday, but market will be looking for clues on future moves by the central bank.
A report Tuesday showed US wholesale prices edged up 0.1 pct in August, in a further sign of easing inflation pressures.
Peter Morici, an economist at the University of Maryland School of Business, said inflation may be even less of a problem as a result of the decline in energy costs in recent weeks.
"Since early August, crude oil prices have fallen nearly 15 usd a barrel and gasoline has dropped more than 50 cents a gallon," he noted.
"Inflation should cool significantly in September and October, and the Fed should become more comfortable, keeping interest rates at current levels."
In late New York trade, the dollar stood at 1.2512 sfr after 1.2505 Monday. The pound was being traded at 1.8813 usd from 1.8802.
At 2100 GMT, the euro fell to 1.2675 usd from 1.2705 usd late Monday in New York.
The dollar stood at 117.71 yen, compared with 117.91 yen late on Monday.
Reports from Thailand said a state of emergency had been declared after an apparent military coup, with plotters said to have taken control of all six of the kingdom's public television stations, as well as radio stations.
The news sparked selling in the Thai baht and quickly spread to other Asian and Latin American currencies as the news caused investors to curb their risk appetite, with the Australian dollar also falling to a day low of 0.7515 against its US counterpart.
"It's been a long time since the word contagion has been in use but the events in Thailand could prove to be just that if players decide to take risk off the table by taking money off on their other emerging market trades," said Divyang Shah at IDEAglobal.com.
The US dollar benefited from the news meanwhile, erasing some of its earlier losses which came in the wake of weaker-than-expected US housing starts and inflation data which further reduced the chances of the Federal Reserve raising interest rates any further.
Jamie Coleman at Thomson IFR Markets said the trouble in Thailand was likely to spark jitters in financial markets, particularly as the Thai devaluation of July 1997 was the catalyst for the Asian financial crisis.
The initial dollar reaction during that crisis was a period of dollar strength, he noted, followed by a weakening as Asian nations repatriated foreign holdings.
"This present crisis looks contained, but few felt a devaluation by a small country would have such profound impact around the world for more than a year in its wake," he cautioned.
The yen made a sharp recovery after Monday's selloff, which came after the Group of Seven made no specific reference to the Japanese currency.
Ian Gunner at Mellon Financial said the yen saw "a dramatic turn of fortune" after comments by Japanese Finance Minister Sadakazu Tanigaki who dismissed the notion of a secret deal between Japan and the euro zone on exchange rates.
In the United States, the Federal Reserve was widely expected to keep its key interest rate unchanged at 5.25 pct at its meeting on Wednesday, but market will be looking for clues on future moves by the central bank.
A report Tuesday showed US wholesale prices edged up 0.1 pct in August, in a further sign of easing inflation pressures.
Peter Morici, an economist at the University of Maryland School of Business, said inflation may be even less of a problem as a result of the decline in energy costs in recent weeks.
"Since early August, crude oil prices have fallen nearly 15 usd a barrel and gasoline has dropped more than 50 cents a gallon," he noted.
"Inflation should cool significantly in September and October, and the Fed should become more comfortable, keeping interest rates at current levels."
In late New York trade, the dollar stood at 1.2512 sfr after 1.2505 Monday. The pound was being traded at 1.8813 usd from 1.8802.
Labels: Forex News, US Dollar
FTI Consulting to offer $215M in debt Monday, September 18, 2006
BALTIMORE - FTI Consulting Inc., a provider of forensic accounting and litigation support services, on Monday said it plans to sell $215 million worth of debt to institutional investors.
The senior notes mature in 2016.
The company said it intends to use proceeds from the sale to partly finance the $260 million acquisition of FD International Ltd. that it announced earlier this month.
Shares of FTI Consulting fell 7 cents to $24.87 in midday trading on the New York Stock Exchange.
The senior notes mature in 2016.
The company said it intends to use proceeds from the sale to partly finance the $260 million acquisition of FD International Ltd. that it announced earlier this month.
Shares of FTI Consulting fell 7 cents to $24.87 in midday trading on the New York Stock Exchange.
Labels: Forex News
USD Loses Ground Ahead of CPI
The dollar slid against the majors, relinquishing the 1.27-level against the euro and briefly falling beneath 1.89 versus the British pound. Upbeat US economic data failed to deter selling in the greenback as markets look ahead to Friday’s inflation report and the upcoming weekend’s G7 Finance Minister’s meeting in Singapore. The major currency pairs have continued to consolidate within range as traders remain reluctant to commit prior to the forthcoming events.
US economic data released on Thursday included retail sales and weekly jobless claims. The August retail sales report unexpectedly improved to 0.2%, beating calls for a drop of 0.1%. The ex-autos figure was slightly softer than forecasts at 0.2%, and down from last month of 1.0%. The weekly jobless claims improved to 308k also, down from 310k previously. The key highlight will be Friday’s consumer inflation data. The August CPI report is expected to slip to 0.2%, from a month earlier at 0.4%. The core CPI is unchanged at 0.2%. Also due out tomorrow is industrial output, forecasted to slip to 0.2%, capacity utilization at 82.5% and the University of Michigan Consumer Sentiment at 83.7.
US economic data released on Thursday included retail sales and weekly jobless claims. The August retail sales report unexpectedly improved to 0.2%, beating calls for a drop of 0.1%. The ex-autos figure was slightly softer than forecasts at 0.2%, and down from last month of 1.0%. The weekly jobless claims improved to 308k also, down from 310k previously. The key highlight will be Friday’s consumer inflation data. The August CPI report is expected to slip to 0.2%, from a month earlier at 0.4%. The core CPI is unchanged at 0.2%. Also due out tomorrow is industrial output, forecasted to slip to 0.2%, capacity utilization at 82.5% and the University of Michigan Consumer Sentiment at 83.7.
Labels: Forex News, US Dollar
US Current Account Balance Sunday, September 17, 2006
Outlook: US Current Account deficit is expected to expand to a near record –213.0 Billion for the second quarter of 2006 as widening Trade deficits will likely show further deterioration in US balance sheet position. This week's record trade deficit of –68 Billion showed that US import demand for both energy and non-energy goods and services remains unabated and will continue to contribute to creating a Current Account deficit which is fast approaching one trillion dollar mark on an annual basis.
Previous: The U.S. current-account deficit shrank more than forecast in the first quarter from a record in the previous three months as the trade balance improved and Americans earned more on their overseas investments. The deficit, the broadest measure of trade because it includes transfer payments and investment income, declined to $208.7 billion from a revised $223.1 billion the previous three months, the Commerce Department said today in Washington. The gap narrowed to 6.4 percent of the economy from 7 percent in the fourth quarter.
Labels: Forex News
Canadian International Securities Transactions
Outlook: Net investment in Canadian assets is expected to rebound in July as international investors sought higher and more reliable yields. All three asset classes measured by the securities transaction read (equities, government debt and company bonds) were likely in demand through the month. Starting with the most risky, equities, a strong performance by the TSX/S&P Composite index was likely the first attraction for capital influx. The TSX index advanced to 11,900 after a brief retracement in the middle of the month, to match the highest level seen in two-and-a-half months. Furthermore, for those seeking the returns on stocks, a strong interest in owning Canadian resource producers was facilitated by record prices in a few key commodities and an intensifying M&A interest, which in itself likely boosted the balance. Despite the optimism in equities, most of the inflow of international capital probably found its way into corporate and government bonds. Though the Bank of Canada made it more than clear it wouldn’t raise rates again in the near future, the US Fed was saying much of the same. With spreads fixed between the two, and the US actively engaged in conflicts, verbal or otherwise, in Iraq, Iran and other places in the world; Canada was more secure in its neutrality. One potential problem however could have been fear over fluctuations in exchange rates. At a 28-year high against the US dollar, if the loonie appreciates dramatically while an investor has money in Canada, their returns would be shaved when they exchange back to their home currency.
Previous: Canada’s net surplus on securities investment fell to its lowest point this year in June as foreign investors lightened their supplies of Canada’s bonds and Canadians looked to use the favorable exchange rate and higher yields across the boarder to stretch the returns in foreign markets. According to Statistics Canada, international securities transactions shrank to a net C$343 million from C$5.876 billion in May. For global investors looking to place their money with less risky, yet high yielding assets, the appeal of Canadian bonds shrank after the BoC decided to halt its string of seven consecutive interest rate hikes. Perhaps more burdensome for the surplus however was Canadians investment abroad. With the US not yet revealing its decision to halt rate hikes, the rate differential was pulling more capital south of the border.
Labels: Forex News
UK Rightmove House Prices
Outlook: The Rightmove measure of UK house price growth could continue to decline in the month of September following August’s slip of 1.6%. Although last month’s figure was negative, the annual rate of house price expansion was still 9.0%, which could have been enough to temper demand even more. A reduction in the amount of potential buyers may also be exacerbated by the increase in interest rates in August by the Bank of England to 4.75%, as well as the potential for further hikes later in the year. On the other hand, a tighter labor market which has helped maintain wage growth, could have given purchasers more confidence in affordability, lending upside risk to the house price number.
Previous: House prices in the UK, as measure by Rightmove, declined 1.6% in August, which was the largest fall in nearly two years. Rightmove reported that the slowdown was partly due to seasonal factors, however, they also highlighted that they believe that prices had peaked for 2006. Adding to the already sky-high prices in the housing market was the BOE’s surprise 25 basis point hike on August 3rd to 4.75%. Potential home buyers were subsequently left with not only increased prices, but also rising borrowing costs, and likely kept some of them out of the market altogether.
Labels: Forex News
G7 MEETING Main points of statement Saturday, September 16, 2006
SINGAPORE - Here are the main points of the statement issued by the Group of Seven finance ministers and central bank governors after their meeting in Singapore today:
On global economic growth and outlook:
-- In our economies, performance remains strong amid moderating growth in the US, growth in the euro zone...should remain strong in the second half of the year, growth in the UK is becoming stronger and more balanced, Canada remains on a strong balanced growth path, and Japan has exited the zero-interest rate policy and its recovery is now broadly-based.
The positive outlook, however, is not without potential outside risks, e.g., tight and volatile energy markets, rising inflation expectations in some economies, and the spread of protectionist tendencies. We will remain vigilant to these developments.
We are of the view that high energy prices reflect both rising demand from strong global expansion and concerns about current and future supplies, though the prices have eased recently. In addition to promoting greater transparency and reliability in energy market data, including through development of a global common standard for reporting oil reserves, we thus encourage investment in exploration, production, transportation and refinery capacity.
On global trade talks:
---We stress the importance of advancing multilateral trade liberalization, which is essential to enhancing global growth and reducing poverty. We urge all parties to show political will and flexibility necessary to resume the Doha Development Round as soon as possible, in order to achieve a comprehensive package in agriculture, industrial products, services, including financial services, intellectual property and WTO trade rules.
This must address the concerns of developing countries, in particular the least developed countries. We also emphasize the importance of delivering aid for trade to low-income countries, consistent with the principle of aid-effectiveness. We underline the need to combat counterfeiting and piracy.
On currency issues:
---We reaffirm that exchange rates should reflect economic fundamentals. Excess volatility and disorderly movements in exchange rates are undesirable for economic growth. We continue to monitor exchange markets closely and cooperate as appropriate. Greater exchange rate flexibility is desirable in emerging economies with large current account surpluses, especially China, for necessary adjustments to occur.
On IMF reforms:
---We reaffirm our strong belief... that fundamental reform is necessary for the IMF to maintain its legitimacy, relevancy, and credibility in the changing global economy. We welcome the resolution on quota and voice reform now being considered by IMF governors, and urge all members to support it.
We endorse the objectives of making IMF quota and voting shares more responsive to changes in global economic realities in the future and enhancing the participation and voice for low-income countries. We will work intensively with all members of the IMF to ensure these objectives are met equitably.
On financial sector regulation:
---The IMF should make appropriate revisions to the guidelines so that they better define its surveillance framework for fiscal, financial sector, exchange rate and monetary policies and their collective spillovers on other countries. Together with a remit to set priorities and enhance accountability, this will improve surveillance. We look forward to the completion of this work by the 2007 Spring Meetings.
On the question of a new instrument that allows economies with market access to forestall sudden disruption in capital flows, we ask the (IMF) Managing Director to present a concrete proposal that is deemed effective and realistic, as well as adequately safeguarding IMF resources, by the 2007 Spring Meetings.
On debt relief for poor nations:
---While welcoming the increasing role of new donor countries, we believe it is imperative that all donors share information and take account of debt sustainability issues in their lending practices.
We look forward to further discussions on strengthening the debt sustainability framework in the coming months, taking into account, e.g., IDA's (International Development Association's) recently-adopted policy.
In order to secure the full delivery of debt relief under the HIPC (Heavily Indebted Poor Countries) initiative, the IFIs (international financial institutions) should redouble their efforts to encourage non-Paris Club official bilateral and commercial creditor participation in the Initiative.
On the Middle East:
---The international community has a high stake in achieving long-term political and economic stability in the Middle East. In this light we support the Government of Lebanon's efforts towards reconstruction, development and economic reform. We welcome donors' commitments to help Lebanon, and look forward to a deeper involvement of the IFIs.
On combating money laundering and terrorist financing:
-- We agreed to intensify our efforts to combat money laundering; proliferation network as well as terrorist and illicit financing by addressing global financial vulnerabilities particularly those associated with jurisdictions that have failed to recognize international standards.
We urge the FATF to focus on identifying and adopting appropriate measures within its mandate. We ask the IMF and the World Bank to work closely with the FATF to foster implementation of the relevant international standards. We also encourage all countries to publish their full evaluations.
On global economic growth and outlook:
-- In our economies, performance remains strong amid moderating growth in the US, growth in the euro zone...should remain strong in the second half of the year, growth in the UK is becoming stronger and more balanced, Canada remains on a strong balanced growth path, and Japan has exited the zero-interest rate policy and its recovery is now broadly-based.
The positive outlook, however, is not without potential outside risks, e.g., tight and volatile energy markets, rising inflation expectations in some economies, and the spread of protectionist tendencies. We will remain vigilant to these developments.
We are of the view that high energy prices reflect both rising demand from strong global expansion and concerns about current and future supplies, though the prices have eased recently. In addition to promoting greater transparency and reliability in energy market data, including through development of a global common standard for reporting oil reserves, we thus encourage investment in exploration, production, transportation and refinery capacity.
On global trade talks:
---We stress the importance of advancing multilateral trade liberalization, which is essential to enhancing global growth and reducing poverty. We urge all parties to show political will and flexibility necessary to resume the Doha Development Round as soon as possible, in order to achieve a comprehensive package in agriculture, industrial products, services, including financial services, intellectual property and WTO trade rules.
This must address the concerns of developing countries, in particular the least developed countries. We also emphasize the importance of delivering aid for trade to low-income countries, consistent with the principle of aid-effectiveness. We underline the need to combat counterfeiting and piracy.
On currency issues:
---We reaffirm that exchange rates should reflect economic fundamentals. Excess volatility and disorderly movements in exchange rates are undesirable for economic growth. We continue to monitor exchange markets closely and cooperate as appropriate. Greater exchange rate flexibility is desirable in emerging economies with large current account surpluses, especially China, for necessary adjustments to occur.
On IMF reforms:
---We reaffirm our strong belief... that fundamental reform is necessary for the IMF to maintain its legitimacy, relevancy, and credibility in the changing global economy. We welcome the resolution on quota and voice reform now being considered by IMF governors, and urge all members to support it.
We endorse the objectives of making IMF quota and voting shares more responsive to changes in global economic realities in the future and enhancing the participation and voice for low-income countries. We will work intensively with all members of the IMF to ensure these objectives are met equitably.
On financial sector regulation:
---The IMF should make appropriate revisions to the guidelines so that they better define its surveillance framework for fiscal, financial sector, exchange rate and monetary policies and their collective spillovers on other countries. Together with a remit to set priorities and enhance accountability, this will improve surveillance. We look forward to the completion of this work by the 2007 Spring Meetings.
On the question of a new instrument that allows economies with market access to forestall sudden disruption in capital flows, we ask the (IMF) Managing Director to present a concrete proposal that is deemed effective and realistic, as well as adequately safeguarding IMF resources, by the 2007 Spring Meetings.
On debt relief for poor nations:
---While welcoming the increasing role of new donor countries, we believe it is imperative that all donors share information and take account of debt sustainability issues in their lending practices.
We look forward to further discussions on strengthening the debt sustainability framework in the coming months, taking into account, e.g., IDA's (International Development Association's) recently-adopted policy.
In order to secure the full delivery of debt relief under the HIPC (Heavily Indebted Poor Countries) initiative, the IFIs (international financial institutions) should redouble their efforts to encourage non-Paris Club official bilateral and commercial creditor participation in the Initiative.
On the Middle East:
---The international community has a high stake in achieving long-term political and economic stability in the Middle East. In this light we support the Government of Lebanon's efforts towards reconstruction, development and economic reform. We welcome donors' commitments to help Lebanon, and look forward to a deeper involvement of the IFIs.
On combating money laundering and terrorist financing:
-- We agreed to intensify our efforts to combat money laundering; proliferation network as well as terrorist and illicit financing by addressing global financial vulnerabilities particularly those associated with jurisdictions that have failed to recognize international standards.
We urge the FATF to focus on identifying and adopting appropriate measures within its mandate. We ask the IMF and the World Bank to work closely with the FATF to foster implementation of the relevant international standards. We also encourage all countries to publish their full evaluations.
Labels: Forex News
G7 MEETING Main points of statement
SINGAPORE - Here are the main points of the statement issued by the Group of Seven finance ministers and central bank governors after their meeting in Singapore today:
On global economic growth and outlook:
-- In our economies, performance remains strong amid moderating growth in the US, growth in the euro zone...should remain strong in the second half of the year, growth in the UK is becoming stronger and more balanced, Canada remains on a strong balanced growth path, and Japan has exited the zero-interest rate policy and its recovery is now broadly-based.
The positive outlook, however, is not without potential outside risks, e.g., tight and volatile energy markets, rising inflation expectations in some economies, and the spread of protectionist tendencies. We will remain vigilant to these developments.
We are of the view that high energy prices reflect both rising demand from strong global expansion and concerns about current and future supplies, though the prices have eased recently. In addition to promoting greater transparency and reliability in energy market data, including through development of a global common standard for reporting oil reserves, we thus encourage investment in exploration, production, transportation and refinery capacity.
On global trade talks:
---We stress the importance of advancing multilateral trade liberalization, which is essential to enhancing global growth and reducing poverty. We urge all parties to show political will and flexibility necessary to resume the Doha Development Round as soon as possible, in order to achieve a comprehensive package in agriculture, industrial products, services, including financial services, intellectual property and WTO trade rules.
This must address the concerns of developing countries, in particular the least developed countries. We also emphasize the importance of delivering aid for trade to low-income countries, consistent with the principle of aid-effectiveness. We underline the need to combat counterfeiting and piracy.
On currency issues:
---We reaffirm that exchange rates should reflect economic fundamentals. Excess volatility and disorderly movements in exchange rates are undesirable for economic growth. We continue to monitor exchange markets closely and cooperate as appropriate. Greater exchange rate flexibility is desirable in emerging economies with large current account surpluses, especially China, for necessary adjustments to occur.
On IMF reforms:
---We reaffirm our strong belief... that fundamental reform is necessary for the IMF to maintain its legitimacy, relevancy, and credibility in the changing global economy. We welcome the resolution on quota and voice reform now being considered by IMF governors, and urge all members to support it.
We endorse the objectives of making IMF quota and voting shares more responsive to changes in global economic realities in the future and enhancing the participation and voice for low-income countries. We will work intensively with all members of the IMF to ensure these objectives are met equitably.
On financial sector regulation:
---The IMF should make appropriate revisions to the guidelines so that they better define its surveillance framework for fiscal, financial sector, exchange rate and monetary policies and their collective spillovers on other countries. Together with a remit to set priorities and enhance accountability, this will improve surveillance. We look forward to the completion of this work by the 2007 Spring Meetings.
On the question of a new instrument that allows economies with market access to forestall sudden disruption in capital flows, we ask the (IMF) Managing Director to present a concrete proposal that is deemed effective and realistic, as well as adequately safeguarding IMF resources, by the 2007 Spring Meetings.
On debt relief for poor nations:
---While welcoming the increasing role of new donor countries, we believe it is imperative that all donors share information and take account of debt sustainability issues in their lending practices.
We look forward to further discussions on strengthening the debt sustainability framework in the coming months, taking into account, e.g., IDA's (International Development Association's) recently-adopted policy.
In order to secure the full delivery of debt relief under the HIPC (Heavily Indebted Poor Countries) initiative, the IFIs (international financial institutions) should redouble their efforts to encourage non-Paris Club official bilateral and commercial creditor participation in the Initiative.
On the Middle East:
---The international community has a high stake in achieving long-term political and economic stability in the Middle East. In this light we support the Government of Lebanon's efforts towards reconstruction, development and economic reform. We welcome donors' commitments to help Lebanon, and look forward to a deeper involvement of the IFIs.
On combating money laundering and terrorist financing:
-- We agreed to intensify our efforts to combat money laundering; proliferation network as well as terrorist and illicit financing by addressing global financial vulnerabilities particularly those associated with jurisdictions that have failed to recognize international standards.
We urge the FATF to focus on identifying and adopting appropriate measures within its mandate. We ask the IMF and the World Bank to work closely with the FATF to foster implementation of the relevant international standards. We also encourage all countries to publish their full evaluations.
On global economic growth and outlook:
-- In our economies, performance remains strong amid moderating growth in the US, growth in the euro zone...should remain strong in the second half of the year, growth in the UK is becoming stronger and more balanced, Canada remains on a strong balanced growth path, and Japan has exited the zero-interest rate policy and its recovery is now broadly-based.
The positive outlook, however, is not without potential outside risks, e.g., tight and volatile energy markets, rising inflation expectations in some economies, and the spread of protectionist tendencies. We will remain vigilant to these developments.
We are of the view that high energy prices reflect both rising demand from strong global expansion and concerns about current and future supplies, though the prices have eased recently. In addition to promoting greater transparency and reliability in energy market data, including through development of a global common standard for reporting oil reserves, we thus encourage investment in exploration, production, transportation and refinery capacity.
On global trade talks:
---We stress the importance of advancing multilateral trade liberalization, which is essential to enhancing global growth and reducing poverty. We urge all parties to show political will and flexibility necessary to resume the Doha Development Round as soon as possible, in order to achieve a comprehensive package in agriculture, industrial products, services, including financial services, intellectual property and WTO trade rules.
This must address the concerns of developing countries, in particular the least developed countries. We also emphasize the importance of delivering aid for trade to low-income countries, consistent with the principle of aid-effectiveness. We underline the need to combat counterfeiting and piracy.
On currency issues:
---We reaffirm that exchange rates should reflect economic fundamentals. Excess volatility and disorderly movements in exchange rates are undesirable for economic growth. We continue to monitor exchange markets closely and cooperate as appropriate. Greater exchange rate flexibility is desirable in emerging economies with large current account surpluses, especially China, for necessary adjustments to occur.
On IMF reforms:
---We reaffirm our strong belief... that fundamental reform is necessary for the IMF to maintain its legitimacy, relevancy, and credibility in the changing global economy. We welcome the resolution on quota and voice reform now being considered by IMF governors, and urge all members to support it.
We endorse the objectives of making IMF quota and voting shares more responsive to changes in global economic realities in the future and enhancing the participation and voice for low-income countries. We will work intensively with all members of the IMF to ensure these objectives are met equitably.
On financial sector regulation:
---The IMF should make appropriate revisions to the guidelines so that they better define its surveillance framework for fiscal, financial sector, exchange rate and monetary policies and their collective spillovers on other countries. Together with a remit to set priorities and enhance accountability, this will improve surveillance. We look forward to the completion of this work by the 2007 Spring Meetings.
On the question of a new instrument that allows economies with market access to forestall sudden disruption in capital flows, we ask the (IMF) Managing Director to present a concrete proposal that is deemed effective and realistic, as well as adequately safeguarding IMF resources, by the 2007 Spring Meetings.
On debt relief for poor nations:
---While welcoming the increasing role of new donor countries, we believe it is imperative that all donors share information and take account of debt sustainability issues in their lending practices.
We look forward to further discussions on strengthening the debt sustainability framework in the coming months, taking into account, e.g., IDA's (International Development Association's) recently-adopted policy.
In order to secure the full delivery of debt relief under the HIPC (Heavily Indebted Poor Countries) initiative, the IFIs (international financial institutions) should redouble their efforts to encourage non-Paris Club official bilateral and commercial creditor participation in the Initiative.
On the Middle East:
---The international community has a high stake in achieving long-term political and economic stability in the Middle East. In this light we support the Government of Lebanon's efforts towards reconstruction, development and economic reform. We welcome donors' commitments to help Lebanon, and look forward to a deeper involvement of the IFIs.
On combating money laundering and terrorist financing:
-- We agreed to intensify our efforts to combat money laundering; proliferation network as well as terrorist and illicit financing by addressing global financial vulnerabilities particularly those associated with jurisdictions that have failed to recognize international standards.
We urge the FATF to focus on identifying and adopting appropriate measures within its mandate. We ask the IMF and the World Bank to work closely with the FATF to foster implementation of the relevant international standards. We also encourage all countries to publish their full evaluations.
Labels: Forex News
U.S. August industrial output falls 0.1% Friday, September 15, 2006
Industrial output fell by 0.1% in the month, following an unrevised 0.4% gain in July, the Fed said. The decline was led by a 0.8% drop in production at utilities. Utilities' output rose by a revised 1% in July. Many parts of the United States experienced high temperatures in July.
Economists were expecting industrial production to rise by 0.2%. Year over year, industrial production is up 4.7%.
Manufacturing production was flat in August, the Fed report shows. It rose by a revised 0.4% in July and 0.9% in June. Output at manufacturers was previously estimated to have risen only 0.1%. Production of business equipment fell for the first time since May, by 0.2%. Despite the drop in August, it's up 13.5% year over year.
The moderating rate of industrial production may give the Federal Reserve another reason to hold interest rates steady at its next meeting, scheduled for Sept. 20.
Economists were expecting industrial production to rise by 0.2%. Year over year, industrial production is up 4.7%.
Manufacturing production was flat in August, the Fed report shows. It rose by a revised 0.4% in July and 0.9% in June. Output at manufacturers was previously estimated to have risen only 0.1%. Production of business equipment fell for the first time since May, by 0.2%. Despite the drop in August, it's up 13.5% year over year.
The moderating rate of industrial production may give the Federal Reserve another reason to hold interest rates steady at its next meeting, scheduled for Sept. 20.
Labels: Forex News
Annual inflation in the euro area slowed down to 2.3%, as it was expected
The data on annual inflation in the euro area (harmonized consumer price index), published today by Eurostat, the Statistical Office of the European Communities, absolutely justified the expectations.
The harmonized consumer price index rose in July by 0.1% in a month, compared with the reduction by 0.1% in July. The annual inflation amounted to 2.3% in August, having narrowed from 2.4% in July.
The major sectors, where the harmonized consumer price index substantially increased, were hotel and restaurant business (0.3%), clothes (0.2%), housing (0.2%) and recreation (0.2%). Consumer prices for fruit, transport fuel and telecommunications dropped.
The harmonized consumer price index rose in July by 0.1% in a month, compared with the reduction by 0.1% in July. The annual inflation amounted to 2.3% in August, having narrowed from 2.4% in July.
The major sectors, where the harmonized consumer price index substantially increased, were hotel and restaurant business (0.3%), clothes (0.2%), housing (0.2%) and recreation (0.2%). Consumer prices for fruit, transport fuel and telecommunications dropped.
Labels: Forex News
