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11 Aug: Comment and currencies

| Posted by: Paul Donovan | Tags: Paul Donovan

  • Fischer and Lockhart of the Fed were not dovish per se (rates are rising) but also not rabidly demanding rate rises right now. If the Fed is going to be data dependent, then perhaps we had better depend on the data.
  • In the wake of the Bank of England's attempts to obscure their decision making process by throwing everything out all at once, David Miles of the MPC has coyly hinted that he was close to voting for a rate hike. So perhaps the 8:1 vote was not so certain as was assumed.
  • German ZEW confidence survey should show a relative indifference to the fallout of the Greco-German crisis (negotiations over the next Greek bailout continue). Meanwhile US productivity and unit labour cost data are due – critical to inflation trends, but dependent on the US government being able to get its GDP data right.
  • China allowed its currency to weaken somewhat in the daily fixing. This is part of a process of showing that market forces play a role, ahead of the IMF's review of Chinese inclusion in the SDR basket of international currencies.