Archive - February, 2013

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European Central Bank President Mario Draghi signaled the bank has no intention of tightening monetary policy anytime soon with inflation projected to “significantly” undershoot its 2 percent target next year - Bloomberg Royal Bank of Scotland (RBS) has reported its fifth annual loss since it was rescued by the government in 2008. Pre-tax loss of £5.16bn includes past conduct charges of £1.1bn for PPI settlements, £700m for interest rate swaps and a £…

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Deputy Governor of the Bank of England Paul Tucker, appearing before the Treasury select committee yesterday mentioned the radical idea of negative interest rates. It seemed more of an idea, rather than the groundwork for future policy, but it highlighted the bank does have other options left to help the economy. The idea is based upon the notion, that banks are currently parking considerable sums on deposit with the central bank for safety, rather than lending to individuals and businesses.…

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There has been speculation for some time that the UK, would lose its coveted AAA credit rating, as the coalition struggles to meet its fiscal targets and growth continues in a “zig zag” fashion as coined by Mervyn King. The downgrade is an embarrassment to the Chancellor George Osborne, as he had said that keeping the top credit rating would be a measure of his and the coalition’s term. This is the first downgrade in the 25 years that Moody’s has been rating debt. Ana…

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The foreign exchange (FX) market is decentralised and predominantly executed over-the-counter (OTC). In the majority of spot FX positions, the trader is required to take delivery of his currency T+2 (settlement two days after the transaction date). However if a trader doesn’t want to take delivery of his position, then it is “rolled” into the next day. This occurs each day at 5pm ET (New York) and the positions are effectively closed and then reopened for the next trading d…

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Foreign Exchange Direct Market Access (DMA) Originally the majority of retail traders were unable to access the direct underlying market due to the size and frequency of their trades. Trading was originally restricted to banks, inter-dealer brokers, hedge funds and local (proprietary) traders. The OTC market is based on bilateral credit lines between institutions, which have counterparty risk. As technology has advanced, electronic screen based trading and opened up trading to t…

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Brussels turn up pressure on Libor - Financial Times The UK’s OBR said that faster tax growth or lower than forecast public spending will be required for the government to meet its deficit forecast The BoE has a case for restarting its QE, and may need to increase it by up to £175bn if the economy is running substantially below capacity -Daily Telegraph WTI Crude rebounds; set for biggest weekly drop Since December –Bloomberg This morning upbeat comm…

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Bank of England: MINUTES OF THE MONETARY POLICY COMMITTEE MEETING 6 AND 7 FEBRUARY 2013 Full Bank of England PDF: http://www.bankofengland.co.uk/publications/minutes/Documents/mpc/pdf/2013/mpc1302.pdf This link is to an external website (www.bankofengland.co.uk) and Abshire-Smith cannot be held responsible for its contents.…

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HSBC Global Head of FX Research David Bloom calling forUSDJPYat 75 over the next couple of years –Reuters Sterling hits seven-month low on dollar - CityAM European proposals to curb bank bonuses will lead to higher salaries and a less stable financial system, Britain has argued, in a last ditch attempt to water-down rules that threaten the City - Daily Telegraph A few members of the Bank of Japan's policy board thought the BOJ could extend the remaining life of Ja…

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M&A seems to have sprung to life, as Warren Buffett’s Berkshire Hathaway and 3G Capital agreed to buy Heinz for $28bn, which is one of the food industry’s largest acquisitions SAC Capital Advisors, the hedge-fund is seeking to stem investor outflow, amid legal and regulatory scrutiny -WSJ Commerzbank loses $954 million in Q4 RBA’s Kent Says Chinese Demand for Commodities to Remain Strong -Bloomberg The Treasury has put billions of pounds of taxpa…

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Yesterday Mark Carney the current Bank of Canada Governor, and future Bank of England Governor took centre stage. The Treasury Select Committee (TSC) immediately began with questions about his remuneration and housing allowance; Carney seemed comfortable, calm and collected. Initially sterling rallied following the release of his written answers to questions he had received prior. Mark Carney hinted towards a change in stance from Mervyn King’s current approach, but was respectful that…

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Halifax house prices show that UK property market registered its first annual rise since October 2010 Business Secretary Vince Cable has said that the part nationalised Royal Bank of Scotland, should have been fully nationalised to avoid its current state of limbo Fitch confirmed Holland’s AAA rating but revised its outlook to negative Cameron will not accept a deal on the EU budget at this week's summit in Brussels unless it freezes or cuts European spending -Gua…

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Chinese HSBC services PMI which rose to a four-month high of 54.0 from 51.7 in December RBA minutes which saw the bank leave rates unchanged at 3.00% S&P credit rating agency faces lawsuit over ratings - Telegraph Hedge Funds are taking large short positions for UK retailers, in a bet that further high street chains will collapse - CityAM SGX in talks over taking a stake in LCH.Clearnet - Financial Times Ford expect to spend $5bn this year shoring up its pen…

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