Euro Selling Climax Signals Reversal to Mizuho on Fundamentals
(Bloomberg) -- The euro is ripe for a rebound after its slump to a 12-year low went too far, too fast based on the region's economic fundamentals, including one of the world's largest current-account surpluses, according to Mizuho Bank Ltd.
The 19-nation common currency fell to $1.0458 on March 16, its lowest since January 2003, as euro bloc's monetary policies diverge from those of the U.S. The European Central Bank on March 9 began buying euro-area government bonds in the secondary market, a step President Mario Draghi referred to as "the final set of measures" of a series of decisions that the bank has taken since June last year.
"The euro is equipped with two highly significant elements justifying its strength, yet it is the weakest currency now thanks to speculative selling," Daisuke Karakama, chief market economist at Mizuho Bank in Tokyo and a former European Commission official, said in an interview in Tokyo on March 10. "With the start of quantitative easing that is the final set of measures, euro selling is at its climax. We should be mindful of waning incentives to push it lower."
Fed set to ditch 'patient' rate vow as it eyes U.S., world growth
(Reuters) - The Federal Reserve on Wednesday is expected to lay the groundwork for its first interest rate hike in nearly a decade, as it continues to weigh whether the U.S. recovery can hold up against collapsing oil prices and a soaring dollar.
The U.S. central bank's latest policy meeting will conclude with certainty expected on one point: it will likely discard a pledge to remain "patient" before hiking rates, trimming one of the final verbal cues it has used through crisis, recession and recovery to describe its intent to keep rates near zero for a period of time.
The move would mark an important moment for Fed Chair Janet Yellen who, despite being seen as a policy dove, has overseen a steady whittling away of loose money promises: the policy statement during her first year as Fed chief shrank from 790 words to 529.
Goldman Bets Against Yuan as China Slowdown Spurs Outflows
(Bloomberg) -- Goldman Sachs Asset Management has been betting against the Chinese currency as a slowdown in the world's second-largest economy spurs capital outflows.
"We've been short the yuan for several months," Yacov Arnopolin, who helps oversee about $39 billion in emerging-market debt as a managing director at Goldman Sachs Asset, said in a March 16 interview in New York. "It's certainly difficult to continue the strengthening trend in the face of the slowing economy. It's a challenging time."
The yuan has fallen 0.4 percent against the greenback this year, following a 2.4 percent drop in 2014 that was the first annual decline in five years. Premier Li Keqiang has set China's 2015 economic growth target at 7 percent, the least in more than 15 years.