Tuesday, December 04, 2007 9:21:00 AM - Tuesday morning, the Bank of Canada announced that it is lowering its target for the overnight rate by a quarter percentage point to 4.25 percent. This marks the Canadian central bank's first rate cut in over three years.
The bank's accompanying statement suggested that the decision to lower interest rates for the first time since April of 2004 was partly based on easing concerns about the pace of inflation.
While the Bank of Canada said that the Canadian economy has been growing in line with expectations due to strength in domestic demand, it noted that both total consumer price inflation and core inflation were below its expectations in October.
The tamer than expected inflation reflected increased competitive pressures related to the level of the Canadian dollar, the bank said, adding that it now expects inflation over the next several months to be lower than expected.
The bank noted that there continue to be upside risks to its inflation projection due to the strength of domestic demand and weak productivity growth, but it also said other developments since October suggest that the downside risks to its inflation projection have increased.
The Bank of Canada said, “Global financial market difficulties related to the valuation of structured products and anticipated losses on U.S. sub-prime mortgages have worsened since mid-October, and are expected to persist for a longer period of time.”
Subsequently, the bank said that there is an increased risk to the prospects for demand for Canadian exports as the outlook for the U.S. economy, and in particular the U.S. housing sector, has weakened.
Based on all these factors, the Bank of Canada said it determined that has been a shift to the downside in the balance of risks around its outlook for inflation through 2009.
The bank added that it would assess all economic and financial developments and the balance of risks when it makes its next interest rate decision on January 22.
Swiss Currency Strong On Tuesday Versus Majors [USD/CHF]
Tuesday, December 04, 2007 8:57:05 AM - The Swiss currency was mostly strong in trading against its world counterparts on Tuesday morning in New York. The franc moved with little news from the area.
The Swiss franc rose steadily against its American counterpart in trading on Tuesday. By the mid morning, the currency had advanced to a mark of 1.1179. The pair moved as no major economic reports are scheduled for release in the US. Wednesday, revised productivity for the third quarter is scheduled for release, along with October factory orders and November's ISM services index.
The Swiss currency rose against its British counterpart in trading on Tuesday into the mid morning. The franc climbed to 2.3054 versus the sterling. Overall, the currency is coming down off a recent weekly low.
In trading against the euro, the Swiss currency saw strength on Tuesday's mid morning action. The advance brought the franc to a mark of 1.6491 as action progressed. The currencies traded as the Eurostat announced that industrial producer prices rose 0.6% from the prior month in October, larger than the 0.4% in September. Economists had expected producer price inflation to climb at the same pace of 0.4% in October.
Versus the Japanese currency, the franc was strong in trading on Tuesday. As action moved into the mid morning, the Swiss currency rose to a mark of 98.21. The pair moved as it was announced that Japan's monetary base rose 1% year-on-year in November to 87.16 trillion yen. A year ago, the monetary base fell 22.3%. The seasonally adjusted monetary base grew 0.5% year-on-year in November, smaller than the 2.4% registered in October.
Source : http://www.rttnews.com/FOREX/FXTopStory.asp?date=12/04/2007&item=4
The bank's accompanying statement suggested that the decision to lower interest rates for the first time since April of 2004 was partly based on easing concerns about the pace of inflation.
While the Bank of Canada said that the Canadian economy has been growing in line with expectations due to strength in domestic demand, it noted that both total consumer price inflation and core inflation were below its expectations in October.
The tamer than expected inflation reflected increased competitive pressures related to the level of the Canadian dollar, the bank said, adding that it now expects inflation over the next several months to be lower than expected.
The bank noted that there continue to be upside risks to its inflation projection due to the strength of domestic demand and weak productivity growth, but it also said other developments since October suggest that the downside risks to its inflation projection have increased.
The Bank of Canada said, “Global financial market difficulties related to the valuation of structured products and anticipated losses on U.S. sub-prime mortgages have worsened since mid-October, and are expected to persist for a longer period of time.”
Subsequently, the bank said that there is an increased risk to the prospects for demand for Canadian exports as the outlook for the U.S. economy, and in particular the U.S. housing sector, has weakened.
Based on all these factors, the Bank of Canada said it determined that has been a shift to the downside in the balance of risks around its outlook for inflation through 2009.
The bank added that it would assess all economic and financial developments and the balance of risks when it makes its next interest rate decision on January 22.
Swiss Currency Strong On Tuesday Versus Majors [USD/CHF]
Tuesday, December 04, 2007 8:57:05 AM - The Swiss currency was mostly strong in trading against its world counterparts on Tuesday morning in New York. The franc moved with little news from the area.
The Swiss franc rose steadily against its American counterpart in trading on Tuesday. By the mid morning, the currency had advanced to a mark of 1.1179. The pair moved as no major economic reports are scheduled for release in the US. Wednesday, revised productivity for the third quarter is scheduled for release, along with October factory orders and November's ISM services index.
The Swiss currency rose against its British counterpart in trading on Tuesday into the mid morning. The franc climbed to 2.3054 versus the sterling. Overall, the currency is coming down off a recent weekly low.
In trading against the euro, the Swiss currency saw strength on Tuesday's mid morning action. The advance brought the franc to a mark of 1.6491 as action progressed. The currencies traded as the Eurostat announced that industrial producer prices rose 0.6% from the prior month in October, larger than the 0.4% in September. Economists had expected producer price inflation to climb at the same pace of 0.4% in October.
Versus the Japanese currency, the franc was strong in trading on Tuesday. As action moved into the mid morning, the Swiss currency rose to a mark of 98.21. The pair moved as it was announced that Japan's monetary base rose 1% year-on-year in November to 87.16 trillion yen. A year ago, the monetary base fell 22.3%. The seasonally adjusted monetary base grew 0.5% year-on-year in November, smaller than the 2.4% registered in October.
Source : http://www.rttnews.com/FOREX/FXTopStory.asp?date=12/04/2007&item=4
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