Browsing all articles from March, 2013

European Central Bank’s Knot backs Jeroen Dijsselbloem comments on bank rescues

Klaas Knot, ECB Governing Council member stated on Friday that there was a little wrong with Euro group chairman Jeroen Dijsselbloem’s method for dealing with future euro zone banking crises.

Dijsselbloem, the head of the euro zone’s finance ministers and similar to Knot a Dutchman stated on Monday that the rescue program decided for Cyprus the first to compel a levy on bank deposits would serve as a model for future crises.

Those comments in which Dijsselbloem afterwards rowed back on, encouraged a market sell off and led two other European Central Bank policymakers, including executive board member Benoit Coeure said on Tuesday that Cyprus was a exceptional case.

However Klaas Knot, who sits on the bank’s main decision making body stated that there is little wrong with Dijsselbloem’s comments.

The content of his comments comes down to an approach which has been on the table for a longer time in Europe. This approach will be component of the European liquidation policy.

Spokesman for the central banker stated Knot’s remarks, reported by Dutch daily Het Financieele Dagblad were precise.

They threaten to additional muddy the waters over an concerns that continues to divide senior politicians and monetary policymaker in the currency alliance who should foot the bill for cleaning up the region’s under performing banks.

In his speech on Thursday night in Amsterdam, Knot said euro zone banks required to clean up their balance sheets by winding down loss making procedures.

He further said initially, there has to be transparency regarding losses in the banking sector. Secondly, banks have to wind down their loss making operations.

Under the Cyprus bailout the bank depositors whose accounts hold more than 100,000 euros face heavy losses.


President Barack Obama Touts Infrastructure In Florida Tour Focused on Economy

President Barack Obama walked into the mouth of a huge tunnel in Miami on Friday to emphasizing proposals to enhanced investment in US infrastructure, a move designed to demonstrate a leader still focused on the economy in the midst of broader policy battles in Washington.

in the past, Obama stated that he wanted to develop a national infrastructure bank and capitalize it with $10 billion. The plan is to pull in private sector funding and select projects based on merit.

He would also generate America Fast Forward Bonds that would facilitate local governments and state attract money for infrastructure projects. These would be direct subsidy bonds in which the issuer would obtain a 28 percent subsidy of the borrowing cost as a way of attracting a wider set of investors.

In addition, Obama would add $4 billion to support two programs that are used to provide funding for infrastructure projects like the Miami tunnel.

It is  not clear that how far the proposals will go in Congress. Republicans are unwilling to support what they consider government stimulus spending following a much criticized $787 billion stimulus plan that Obama managed to push through Congress in 2009.

Since his January inauguration and his re-election in November, Obama has steered a policy push focused principally on passing both immigration reform and tightening the control measures.

But, his State of the Union address in February included a sequence of measures to enhanced the economy and the Florida trip fleshed out some of those ideas.

Alan Krueger, Obama’s chief economist stated that the traveling with the president on Air Force One that the three main suggestion outlined by Obama would cost some $21 billion however that cuts would be made elsewhere to avoid rising the deficit.

Obama’s fiscal 2014 budget proposal will be released on April 10, would spell out how they are paid for, all of the proposals need congressional approval.

While Obama will not run for re-election another time, Florida is still significant for him and his fellow Democrats. The political swing state backed the president in 2012 and will be essential to determining whether a Republican recaptures or whether a Democrat holds on to the White House it in 2016.


New York Assembly Approved Budget On Time Third Year In A Row

New York’s Assembly approved the state’s $135 billion budget for fiscal year 2013-2014 on Thursday just earlier than midnight, the third budget in a row to be delivered on time in a state recognized for regularly being late.

Officials hurried to sign off on the legislation during a week that was interrupt with religious holidays and have succeeded in attaining the job done ahead of the start of the state’s fiscal year on April 1.

Getting the budget completed on time may not sound like much to be proud, however it is being touted as a achievement in a state where seasoned budget watchers remind over a decade of tardiness when budgets would sometimes run into late summer.

Andrew Cuomo, State Governor stated that although three on time budgets in a row should not sound like much and in New York state this is the very first time it has happened in approximately 30 years. Year following year the budgets became a flash point for the chaos and dysfunction of state government.

The Assembly’s 13 hour session broke up just earlier than midnight on Thursday and trait extended debate over a stack of failed adjustments. They included one that attempt to torpedo a tax incentive broadly seen as a way to attract.

A Republican adjustment’s to restore $90 million in funding for the developmentally disabled failed however there were impassioned pleas to revisit the concern on both sides.

The money was cut as Washington Congressional committee stated that New York state was over billing the federal government for Medicaid funds for centers that treat public with developmental disabilities. That led to the state cutting $1.1 billion from the budget proposal in February.

While a package the budget holds spending growth under 2 percent, lift the least wage incrementally to $9 an hour by the end of 2015, extend superior tax rates for millionaires and tax breaks for the middle class that were to expire during coming year.

It also boost state funding for schools by $1 billion and creates a tax rebate program that will deliver $350 checks to a million middle income peoples with children right prior to state elections in 2014.


Gold Knock Down, On Track For 5 Percnet Quarterly Slump

Yellow metal marked lower on Friday, on way to end the quarter with a loss of almost 5 percent, because the euro continued to weak and a rally in equities increased appetite for riskier assets. Shares climbed up in Asia and the gold’s safe haven appeal waned following banks in debt ridden Cyprus reopened on Thursday without rooting a huge run on deposits despite a contentious bailout that taxed huge depositors. Doubts regarding the fiscal stability of the euro zone had sent precious metal prices to a 1 month high previous week.

Kaname Gokon, general manager at Okato Shoji Co’s research section said that looking ahead, bullion is expected to stay in the current range of $1,590 and $1,605 per ounce, referring to coming week’s trading range.

However there is probability that those who have bought TOCOM futures on a weaker yen may start closing their long positions if a market focus is altering to a stronger dollar, which is negative to yellow metal.

Precious gold knock down $1.18 per ounce to $1,594.99 by 0332 GMT in particularly thin trade as many markets in Asia were closed for Good Friday. Prices were losing 4.7 percent for the first quarter its second consecutive quarterly loss.

US gold futures were not-traded. However the most active contract on Tokyo Commodity Exchange, In February strike a low of 4,842 yen a gram its lowest in three weeks, on position squaring on the previous business day of the fiscal year.

Gold future for June delivery knock down $11.50 per ounce or 0.7%, to settle at $1,595.70 per ounce on the Comex division of the New York Mercantile Exchange.


Bank of Cyprus Controls To Previous Month, Minister Says

Bank of Cyprus conceded on Thursday that firmed capital controls would remain in force greater than expected as the island’s banks reopened for the first time following the government was forced to believe a hashed EU rescue package to prevent bankruptcy.

Cypriots lined up peacefully to withdraw partial amounts of cash, however there was no symbol of a run on deposits, as had been frightened.

Banks were shut for almost two weeks as the government discussed a 10 billion euro which is equal to $13 billion international bailout, the first in Euro zone to enforced losses on bank depositors.

Ioannis Kasoulides, Foreign Minister stated curbs on money arrangements imposed following the bailout would be phased out over regarding a month.

A number of restrictions will be lifted and steadily, most likely over a period of about a month according to the estimation of the central bank, the limits will be fully lifted.

Government primarily stated the controls would remain in place for a week subject to reassess. Economists say they will prove hard to boost as long as the economy is in crisis.

A lot of money had already missing electronically. Statistics published by the Central Bank of Cyprus illustrate that savers from other euro zone countries withdrew 18 percent of their deposits from the suffering island in February, as talk of a tax on bank accounts added ground. Overall private sector bank deposits in Cyprus knock down by 2.2 percent to 46.4 billion euros previous month, following a similar slump in January.

To assist the Cyprus banks conditions the crisis, the ECB flew in 5 billion euros which is equals to $6.4 billion in cash overnight from Frankfurt.

Government said it had appointed a board to investigate the banking meltdown and look into assert of junior bondholders.

Constantinos Petrides, under secretary to the Cypriot president said that it will have a broad mandate. It will investigate criminal, political and civil responsibilities.


GBP/USD D1 Technical March 29

Cable is expected to target 1.5260 level today. Bollinger bands are showing buy signals for the pair. At 1.5260 level, price action should be handle carefully. If pair break this level then it will move further upward and target 1.5300 level.

This scenario can be vanished. If Cable didn’t manage to break its resistance and H4 candle close below 1.5260 level. It will then indicate pair got bearish strength and GBP/USD will dropped towards south.


EUR/USD D1 Technical March 29

EUR/USD have now support at 1.2750 level. If pair hold this level then EUR/USD is expecting to target 1.2870 level today. Price action on 1.2870 level should be watch. If pair manage to break this level and H4 candle close above 1.2870 level then, it will allow EUR to continue its uppish trend and target 1.2930 level.

On the contrary. If pair didn’t manage to hold its support 1.2750 level then EUR/USD will dropped rapidly towards south and that will indicate pair is in under pressure and pair will then target 100-150 pips towards south.



AUD/USD H4 Technical March 29

Yesterday in late session Aussies targeted its support at 1.0390 level but didn’t manage to break this level. Now pair is expecting to move up and test its resistance at 1.0454 level. Bollinger bands are also providing buy signals for the pair.

There can be two scenario. First, if AUD/USD manage to break its resistance today and H4 candle close above resistance level, it will then indicate pair got move bullish strength that will  take AUD further upward and target 1.0493 level.

Secondly, If pair fails to break its resistance and H4 candle close below 1.0454 level then pair will start moving toward south and target its support at 1.0390 level again.


Federal Reserve Doves In No Rush To Scale Back Asset Purchases

Primary supporters of the Fed’s bond buying program are not rushing to scale back the swiftness of purchases as the job market improves.

Charles Evans, the president of the Chicago Federal Reserve Bank and a leading architect of the Fed’s specially loose policy, advice a go-slow approach to making any alteration to the $85 billion per month purchases of mortgage and Treasury’s backed securities.

Charles Evans further said that he assumed this is the summit where we have to be patient and let our policies work.

He further said that he prefer and suppose it is best that we carry on to provide strong confidence that we are going to be doing appropriate accommodative policies to get the economy going another time.

Fed will have to have assured that the economy was on solid footing in the second half of the year prior to changing policy. That could simply mean that we require to work our way through the second half prior to we have sufficient confidence that growth is strong enough.

Some other Fed officials are excited for the Fed to diminish the asset purchases. A few believe the Fed should start narrowing as soon as possible.

The Fed is currently buying $40 billion of mortgage-backed securities and $45 billion in long-term Treasury’s per month. Following a two day conference previous week, Ben Bernanke, Fed Chairman said that the Fed wanted to be convinced that current improvement in the labor market was sustainable prior to imitating the purchases.

William Dudley, the president of the New York Fed said that he expected the fed would ultimately scale back the speed of the purchases.

Although Evans argued that the asset purchases were helping the economy. He can not perceive that those are the bound for doing less.  He want to be really careful regarding the signal that reducing bond buying would be.

Evans stated that he was open-minded and a couple of months of job growth above 300,000 would get his concentration and in February, 236,000 jobs were created.


Bank of Cyprus Re-opens it’s Banks Under Tight Restrictions

Banks were closed approximately two weeks ago because the government discuss a 10 billion euro which is equal to $13 billion bailout package, the first in Europe’s single currency zone to entail losses on bank depositors.

Bank employees turned up for job early in Nicosia as cash was delivered by armored trucks. At a branch of the second greatest lender, in central Nicosia the Popular Bank of Cyprus, workers were being briefed prior to opening at noon (1000 GMT).

Establishment said that the emergency rules forced to limit extraction and prevent a bank run will be temporary, however economists said that they will be difficult to boost as long as the economy is in crisis.

In Nicosia there was relief that the banks were reopening however some apprehension regarding what might happen.

Cyprus central bank source said that on Wednesday, container trucks full of cash pulled up inside the compound of the central bank in the capital Nicosia to organize for the reopening.

While in all countries that use the euro, Cyprus’s central bank supplies currency for its banks from the European Central Bank in Frankfurt. Administrator’s promised that enough funds will be on hand to cover demand. The ECB did not remarked on reports it had sent extra cash to the island.

A Finance Ministry ruling imposes strict controls limiting cash withdrawals to no more than 300 euros per day and prohibition the cashing of cheques.

The island’s central bank will review all commercial transactions about 5,000 euros and inspect transactions about 200,000 euros on an individual basis. People exit form Cyprus can take only 1,000 euros with them. An former draft of the decree had put the figure at 3,000.