The Wall Street Journal comments on the ECB
June 10, 2009 by Danish FX · Leave a Comment
The Wall Street Journal Reports
June 9, 2009 by Danish FX · Leave a Comment
Obama administration wants Europeans to put their banks through more rigorous public stress tests - WSJ
- US Treasury Sec Geithner is expected to discuss the issue in Italy later this week during closed-door meetings with finance ministers from the G8.
**Note: European banking and finance authorities have rejected claims that their financial institutions need to be subjected to stress tests; On May 13th, German Fin Min Steinbrueck called US bank stress tests “worthless”
Wall Street Journal Comments on USD
May 26, 2009 by Danish FX · Leave a Comment
WSJ “Currency Trading” section highlights recent dollar weakness possibly triggering USD-buying intervention by central banks of South Korea, Thailand, Taiwan, Singapore, and India in recent weeks
- Notes that despite sensitivity to weak USD, Japan’s officials suggested they would not intervene in FX markets, prompting additional JPY strength
WSJ Reports
April 6, 2009 by Danish FX · Leave a Comment
WSJ Currency Trading section expects lower volatility this week ahead of Easter holidays; sees additional risk reduction benefiting EUR and potential for more Quantitative Easing at tomorrow’s BOJ announcement accelerating JPY decline vs USD
WSJ Commodities Report: The G20 communique announcing gold sales by IMF are unlikely to weigh on prices as global central banks would be the likely buyers
- According to IMF head Strauss-Kahn, the implied sale refer to 403.3 metric tons that have already been announced and are still part to US Congressional approval; Does not expect any further sales
Wall Street Journal Reports
April 3, 2009 by Danish FX · Leave a Comment
WSJ “Heard on the Street”: Fed’s bailout of the mortgage sector is seen as popular and effective, but potentially highly destabilizing going forward
- Immediate political and social benefits include backstop in falling housing prices and added liquidity for mortgage holders leading to less resistance of federal bailout of homeowners facing foreclosure. Moreover, the buying is easy in that the Fed requires no Congress approval, but can print the needed funds
- Long term carries serious risks, including: Credibility of the Fed, rising inflation with expanded balance sheet, potential losses on having to sell higher-yielding mortgages back to investors, learned dependence on the Fed bailout every time an asset bubble emerges, and possible Congressional scrutiny over the Fed role
WSJ Comments on Treasury’s “Private-Public” Plan Goal
March 25, 2009 by Danish FX · Leave a Comment
WSJ “Heard on the Street”: The goal of Treasury’s “private-public” plan is for investors to buy toxic assets from banks, but agreement on price will be difficult
- Despite the complexity of pricing “legacy assets”, attracting a number of bids would force the banks to come up with more realistic valuations. Authorities will also be able to intervene in bidding process by confirming bidders’ valuations based on the currently performed balance sheet stress tests
- Much lower asset values could threaten insolvency for certain banks, and the Treasury will have to decide which banks will be seized and which will be bailed out.
- In the longer term, the Treasury’s plan will still be beneficial by mobilizing private sector to bid for banks’ assets
WSJ Looks at Past Shifts in International Reserve Currencies
March 23, 2009 by Alex Chernomordin · Leave a Comment
A Wall Street Journal article following an essay released on Monday by China’s PBoC Governor Zhou that called for moving toward a “super-sovereign” reserve currency. The article had the following highlights:
- One obstacle to a new reserve currency is political in the sense that the country with the dominant currency might be reluctant to give up the advantages that come with that status.
- In the prior shift from one reserve currency to another in the modern era (from the British pound to the dollar) unfolded over a series of decades.
- According to economists, to start a new global reserve currency will require someone effectively subsidizing the cost of bringing buyers and sellers together for the time it takes the currency to gain traction.
- Some believe that a super-national currency has no natural constituency or home where it can gain gradual acceptance.
- The European Currency Unit (ECU) was created as a unit of account in 1979 and never gained great acceptance, until a concerted effort from European policy makers transformed it into the euro two decades later.
- The article notes that the euro, remains a distant second to the dollar in international usage.
- Also, the global financial crisis has exposed the strains inherent in a shared currrency.
Wall Street Journal Currency Trading Section
March 23, 2009 by Danish FX · Leave a Comment
WSJ Currency Trading section: USD weakness could continue this week as Fed’s efforts on quantitative easing and dollar devaluation sink into sentiment; Cites 1.35-1.40 (EURUSD) range forecast by analysts
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