Fed's Focus Still On Housing, Credit Markets
Global Economy
Fed's Focus Still On Housing, Credit Markets
Federal Reserve Chairman Ben Bernanke said the U.S. central bank will act as needed to ensure housing and credit markets do not further undermine an already sluggish economy, evaluating information bearing on the economic outlook and acting in a timely manner as needed to support growth and to provide adequate insurance against downside risks. Bernanke's comments suggested the Fed is prepared to reduce borrowing costs further, even though he also said the central bank had to keep a close watch on prices.
The Fed has lowered interest rates to 3 percent from 5.25 percent since mid-September and financial markets expect The Fed to lower the rate 50 basis point at their meeting on March 18.
Bernanke said that while the central bank expects inflation to moderate, there was a risk price pressures could remain elevated. But if the public began to doubt the Fed's willingness to take measures to keep inflation at bay, it could hurt the central bank's ability to support growth, he added.
The Fed chairman said the central bank would need to weigh risks posed by weaker growth, shaky financial markets and price pressures as it determines the best setting for interest rates.
Bernanke also noted that monetary policy impacts the economy with a lag and said the Fed needed to keep in mind the economy's likely path, as well as the risks it faces.
Bernanke referred to ``downside'' risks for the economy four times in his testimony, and noted that data pointed to ``sluggish'' growth. Policy choices have also become more complicated as energy and commodity prices rose in recent weeks.
Currencies
Dollar Sinks
The euro rose above $1.51 for the first time in history after Fed Reserve Chairman Ben Bernanke said the Fed will act in a timely manner to support growth and provide insurance against downside risks. The euro rose on mounting speculation that Federal Reserve Chairman Ben S. Bernanke will cut interest rates through mid-year.
The dollar dropped a fifth straight day as European Central Bank policy maker Axel Weber said investors expecting rate cuts in the region are underestimating inflation. The dollar's slide gained momentum yesterday after an unexpected increase in German business confidence that the ECB will lower rates. The currency fell to all time low against the Swiss franc and the New Zealand dollar.
The currency touched $1.5105 per euro, fell to 106.05 yen and dropped as low as 1.0635 francs. The New Zealand dollar rose to 82.13 U.S. cents. This happen on speculation the interest-rate differential will widen in favor of assets outside of the U.S.
The U.S. currency has slid as the housing slump deepened and consumer confidence tumbled, this fact has leading investors to abandon possibilities that U.S. Dollar and U.S. economy would rebound as the Fed cut rates.
All of the 10 most-active currencies in Asia outside Japan gained against the U.S. currency today. Thailand's baht advanced after the central bank kept its benchmark rate unchanged at 3.25 percent. The currency rose to 30.09 per dollar.
Investors believe that a big possibilities that the U.S. central bank will reduce rate for overnight lending between banks by at least 50 basis points at their March 18 meeting.
China Market
Railway Builder Draws $420 Billion in Shanghai IPO
China Railway Construction Corp. drew about 3 trillion yuan ($420 billion) in the fourth-most popular initial public share sale in Shanghai, demand for the sale was 135 times the offering. Institutions, whose bids helped set the price range for China Railway Construction's Shanghai share sale, demanded more than 340 billion yuan of stock.
Investors ordered about 2.67 trillion yuan of shares through the portion of the offering open to all buyers.
The orders reaffirm demand for new stocks after CSI 300 Index dropped 21 percent from its peak in October. That prompted the China Securities Regulatory Commission on Feb. 25 to vow to tighten scrutiny of additional share sales by listed companies.
China Railway Group Ltd., PetroChina Co. and China Coal Energy Co. attracted more money for their first-time Shanghai share sales.
Commodities
Oil
The price held steady below $101 Wednesday following official government data that U.S. commercial crude oil inventories rose by 3.2 million barrels, compared to the previous week. This increase is more than analysts expected.
Total motor gasoline inventories increased by 2.3 million barrels. And distillate fuel inventories decreased by 2.5 million barrels.
Oil hit a new record high above $102 a barrel earlier, closing in on its inflation-adjusted lifetime peak, as the dollar fell to a record low versus the euro.
The move was more about oil as a financial instrument to hedge against inflation, not driven by supply and demand. The expected U.S. inventories stop the prices surge. Oil has become a hedge against inflation and the weak dollar.
Gold
Gold futures rose to $967.70 an ounce as the dollar fell to the lowest ever against the euro, boosting the fact that the metal is an alternative investment. Silver extended a rally to the highest since 1980.
Federal Reserve Chairman Ben S. Bernanke indicates that borrowing costs will be reduced again to bolster the economy. Gold surged 31 percent in 2007 as the Fed initiated interest-rate cuts to avoid a recession.
This cause a great deal concern about the U.S. economy, and there's clearly an inflation threat, that's driving people into gold and silver.
Fed's Focus Still On Housing, Credit Markets
Federal Reserve Chairman Ben Bernanke said the U.S. central bank will act as needed to ensure housing and credit markets do not further undermine an already sluggish economy, evaluating information bearing on the economic outlook and acting in a timely manner as needed to support growth and to provide adequate insurance against downside risks. Bernanke's comments suggested the Fed is prepared to reduce borrowing costs further, even though he also said the central bank had to keep a close watch on prices.
The Fed has lowered interest rates to 3 percent from 5.25 percent since mid-September and financial markets expect The Fed to lower the rate 50 basis point at their meeting on March 18.
Bernanke said that while the central bank expects inflation to moderate, there was a risk price pressures could remain elevated. But if the public began to doubt the Fed's willingness to take measures to keep inflation at bay, it could hurt the central bank's ability to support growth, he added.
The Fed chairman said the central bank would need to weigh risks posed by weaker growth, shaky financial markets and price pressures as it determines the best setting for interest rates.
Bernanke also noted that monetary policy impacts the economy with a lag and said the Fed needed to keep in mind the economy's likely path, as well as the risks it faces.
Bernanke referred to ``downside'' risks for the economy four times in his testimony, and noted that data pointed to ``sluggish'' growth. Policy choices have also become more complicated as energy and commodity prices rose in recent weeks.
Currencies
Dollar Sinks
The euro rose above $1.51 for the first time in history after Fed Reserve Chairman Ben Bernanke said the Fed will act in a timely manner to support growth and provide insurance against downside risks. The euro rose on mounting speculation that Federal Reserve Chairman Ben S. Bernanke will cut interest rates through mid-year.
The dollar dropped a fifth straight day as European Central Bank policy maker Axel Weber said investors expecting rate cuts in the region are underestimating inflation. The dollar's slide gained momentum yesterday after an unexpected increase in German business confidence that the ECB will lower rates. The currency fell to all time low against the Swiss franc and the New Zealand dollar.
The currency touched $1.5105 per euro, fell to 106.05 yen and dropped as low as 1.0635 francs. The New Zealand dollar rose to 82.13 U.S. cents. This happen on speculation the interest-rate differential will widen in favor of assets outside of the U.S.
The U.S. currency has slid as the housing slump deepened and consumer confidence tumbled, this fact has leading investors to abandon possibilities that U.S. Dollar and U.S. economy would rebound as the Fed cut rates.
All of the 10 most-active currencies in Asia outside Japan gained against the U.S. currency today. Thailand's baht advanced after the central bank kept its benchmark rate unchanged at 3.25 percent. The currency rose to 30.09 per dollar.
Investors believe that a big possibilities that the U.S. central bank will reduce rate for overnight lending between banks by at least 50 basis points at their March 18 meeting.
China Market
Railway Builder Draws $420 Billion in Shanghai IPO
China Railway Construction Corp. drew about 3 trillion yuan ($420 billion) in the fourth-most popular initial public share sale in Shanghai, demand for the sale was 135 times the offering. Institutions, whose bids helped set the price range for China Railway Construction's Shanghai share sale, demanded more than 340 billion yuan of stock.
Investors ordered about 2.67 trillion yuan of shares through the portion of the offering open to all buyers.
The orders reaffirm demand for new stocks after CSI 300 Index dropped 21 percent from its peak in October. That prompted the China Securities Regulatory Commission on Feb. 25 to vow to tighten scrutiny of additional share sales by listed companies.
China Railway Group Ltd., PetroChina Co. and China Coal Energy Co. attracted more money for their first-time Shanghai share sales.
Commodities
Oil
The price held steady below $101 Wednesday following official government data that U.S. commercial crude oil inventories rose by 3.2 million barrels, compared to the previous week. This increase is more than analysts expected.
Total motor gasoline inventories increased by 2.3 million barrels. And distillate fuel inventories decreased by 2.5 million barrels.
Oil hit a new record high above $102 a barrel earlier, closing in on its inflation-adjusted lifetime peak, as the dollar fell to a record low versus the euro.
The move was more about oil as a financial instrument to hedge against inflation, not driven by supply and demand. The expected U.S. inventories stop the prices surge. Oil has become a hedge against inflation and the weak dollar.
Gold
Gold futures rose to $967.70 an ounce as the dollar fell to the lowest ever against the euro, boosting the fact that the metal is an alternative investment. Silver extended a rally to the highest since 1980.
Federal Reserve Chairman Ben S. Bernanke indicates that borrowing costs will be reduced again to bolster the economy. Gold surged 31 percent in 2007 as the Fed initiated interest-rate cuts to avoid a recession.
This cause a great deal concern about the U.S. economy, and there's clearly an inflation threat, that's driving people into gold and silver.
Comments