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The Riksbank convened today for the first rate decision since April, and in line with forecasts, the central bank raised the repo rate 25bps to 0.50%. In the last statement from the April meeting, some members had argued for keeping the repo rate unchanged at 0.25% for the rest of 2010, but attitudes have thawed as the Swedish data in the interim has largely been very encouraging. Q1 GDP…

All the elements are in place for this to be a lively and volatile month-end, but equity market performance may well be the overriding factor driving currency movements. The massive losses yesterday have only compounded the sense of risk aversion in the market, and as such we’ve seen a concerted sell-off in commodity currencies, EUR and GBP – coinciding with increased demand for USD, JPY and to…

The heavy slump in Asian equity markets overnight has transmitted into an ugly start for European indices as well, so unsurprisingly the currency markets have reacted by punishing risk-correlated EUR and commodity currencies whilst fleeing to the relative safe havens of the USD, JPY and CHF. The economic calendar between here and Friday is hardly scintillating, and with one eye on the holiday…

The markets have taken a little bit of time warming to the results of the latest G20 meeting in Toronto; but from our perspective the developments should be broadly positive for risk appetite. The striking feature about the communiqué this time around was that leaders actually managed to come to concrete and specific targets rather than the vague non-committal fare that had made the previous…

The recent equity market losses make for gloomy analysis, and coupled with renewed fears over US growth prospects, US Treasury yields have found themselves under immense pressure in the past week.   For the currency trader, the decline in risk appetite should broadly favour the USD, but the drop in yields is something to keep an eye on in terms of USDJPY in particular. Historically there…

As anticipated, the FOMC meeting last night was largely uninspiring; with the Fed statement taking on an expectedly dovish tone that included all the standard rhetoric about low rates continuing “for an extended period”. Some of the sharper dissection of the release noted a slightly more downbeat perspective on the US housing market – and rightly so considering the shocker of a new home sales…

Sterling is looking very attractive right now after an eventful 24 hours. The big news yesterday was the ambitious budget outlined by UK Chancellor George Osborne which sought to drag the UK finances back on track far sooner than markets had estimated; the austere plan of spending cuts (which will constitute the lion’s share of the deficit cutting, around 80%) and tax rises (the remaining 20%)…

The past 24 hours have seen an important shift in rhetoric from SNB policymakers with regards to the Swiss franc; with the take-home message seeming to be that the risks of deflation have abated sufficiently for the central bank to finally step aside and allow the currency to strengthen unhindered. Commentators have long argued that in the face of such overwhelming fundamental facts (the…

Markets are still buzzing from the surprise Chinese announcement to move their currency away from its de facto USD peg. On Saturday Chinese officials stated that they would “proceed further with reforms of the Renminbi exchange rate system and seek to enhance the Renminbi’s exchange rate flexibility”, which to markets participants was a signal that further flexibility to the USDCNY peg is in the…

With a heavy world cup line up for today + a nearly empty global economic calendar, FX prices will be contented to head into the weekend safely within their current ranges. Risk appetite received a boost as Spanish auction of 10y and 30y debt went off without a hitch, although the bid-to-cover ratio was lower. The lower bid-to-cover precipitates higher costs, a fact which the FX market has yet to…