fxmatters

• 2 May 1998 – the European Central Bank is founded in order to define and excute EU monetary policy—a reminder of the youth of the euro.
• May – a month of more extreme EUR/JPY movements that usual, experiencing 4 of the largest annual falls and 4 of the largest annual rises over 20 years. Figures to better so far this year are -4.3% (Jan) and +3.6% (Apr to date).

Both the EUR and AUD made new recent highs against the USD last week, but neither lasted long. With inflation now running higher in Australia, the actions of the RBA will be pivotal in the next few weeks for the NZD as well … Read AUD holds the key

• 24 April 2003 – NZD/USD down 1% after a surprise RBNZ 0.25% rate cut to 5.50% p.a., the first of three rate cuts that—in hindsight—are considered to be a factor behind the persistent tight monetary policy today (to put the move in perspective, the day before China had closed schools for two weeks because of SARS).
• 29 April 2004 – RB raise OCR by 0.25% to 5.50% p.a. in the second of many hikes.

Intervention is coming thick and fast now in the global money markets. It appears only a matter of time beyond intervention in currency markets also occurs … Read After the US rate cut

We have come through a time of woeful global financial stories and depressing local news, and yet the NZ dollar holds up. We are left looking for the trigger that will set off the next NZ dollar plunge … Read Looking for a surprise

• 17 April 1837 – John Pierpont Morgan is born—one day fewer than 171 years later JP Morgan Chase’s quarterly results will be watched with much interest.
• 17 April 1958 – Fed Vice Chairman Balderston states “neither monetary policy nor fiscal policy can maintain economic stability if psychology runs rampant”.
• 19 April 1772 – David Ricardo, “the richest economist in history”, is born.

• 7 April 1998 – Citicorp and Travelers Group form Citigroup, a merger that symbolised the breakaway from the US Glass-Steagall Act that seperated banking from other investment activities, in turn creating the weakly regulated markets now causing many problems. The merger is now seen as a mistake by the initial joint CEO John Reed.

The starting point for most financial market forecasting is to understand what anticipations are built into current rates and prices. Expectations centre on a slightly lower NZD/USD, a USD rebound against the EUR, and a stable AUD/EUR. The next step is to work out where this anticipation will prove wrong … Read Where people expect too much