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- 5000 years of debt
- Welcome to the new-look ForexLive
- Magnitude 7.0 earthquake strikes Szechuan region of China – USGS
- Gunfire heard as police close in on Boston bombing suspect
- G20 Communique – Washington April 18, 19 – full text
- ForexLive Americas wrap: USD/JPY storms back
- Bersani will resign after Presidential vote
- US Treasury official says EU needs to speed up banking union
- Italy’s Bersani could resign at any moment – Senator
- Euro shorts slashed in latest CFTC data
- The biggest mover this week wasn’t the one you’d expect
- The wheels fall off the copper market but it may not be what it seems
- Japan’s Aso: G20 understands BOJ easing is to end deflation
- Draghi reminds Schaeuble the ECB is independent
- Schaeuble: No worries, it’s only democracy at stake
- Disco funk still alive
- Russian minister says FX was less of a concern than Feb G20
- G20 pledges to be mindful of negative effects of monetary easing
- UK taking fight against financial transaction tax to court
- Italy fails to elect President on fourth try
| Posted: 19 Apr 2013 08:46 PM PDT This article unfortunately cited Reinhart and Rogoff but it is a beautiful discussion about the history of debt. They argue that private debt, not public debt is what is crippling Western countries and will continue to undermine any recovery.
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| Welcome to the new-look ForexLive Posted: 19 Apr 2013 05:16 PM PDT Welcome to ForexLive 2.0. All websites need to grow and evolve. For the past two months, we have been working to modernize and maintain a style that’s familiar. The scrolling blog format you all love stayed in place and we gave the page a bit more room to breathe. The first thing to notice is that you can scale the page any size you like. Try it out. When you make your browser window smaller, the text adjusts — a trader never has enough screen real estate so now you can squeeze ForexLive in the right slot. We also found out that so many of you have pinching and zooming to view ForexLive on mobile devices . Our new mobile experience is slick and easy to read. We have rebuild our search options and you can easily find older stories by clicking on the different sessions at the top of the page, or by searching by date at the bottom of the page. More updates are coming in the weeks ahead and we want to incorporate your suggestions. Change is always a bit difficult but give it a chance and let us know how you feel. -Adam |
| Magnitude 7.0 earthquake strikes Szechuan region of China – USGS Posted: 19 Apr 2013 05:15 PM PDT That’s a big one. Update: Sad news as Xinhau reports nearly 30 dead and 400 injured. |
| Gunfire heard as police close in on Boston bombing suspect Posted: 19 Apr 2013 04:23 PM PDT Witnesses report gunfire in Watertown as police and armored cars converged on a potential suspect. Dozens of shots were heard in rapid succession, according to Reuters.
The story from a neighbor is that the owner of the house noticed something was disturbed on the tarp covering the boat. He peaked underneath and saw blood and a body. He fled and called police. Update: The suspect was captured and is in custody. A photo of the arrest has leaked.
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| G20 Communique – Washington April 18, 19 – full text Posted: 19 Apr 2013 04:16 PM PDT This is the text of the Communique issued at the end of the G20 meeting in Washington, 18 – 19 April 2013. The official link is here. Adam posted the main points as they pertain to the FX markets earlier: G20 pledges to be mindful of negative effects of monetary easing - Communiqué Meeting of Finance Ministers and Central Bank Governors Washington, 18-19 April 2013 1. We, the G20 Finance Ministers and Central Bank Governors, met to discuss the current situation in the global economy and to bring forward the policy agenda for our Leaders’ summit in September. Global Economy and G20 Framework for Strong, Sustainable and Balanced Growth 2. We reaffirmed our determination to raise growth and create jobs. 3. The global economy has avoided some major tail risks and financial market conditions continue to improve. However, global growth has continued to be too weak and unemployment remains too high in many countries. The recovery remains uneven and is progressing at different speeds with emerging markets experiencing relatively strong growth, the United States demonstrating a gradual strengthening of private demand, and the recovery in the euro area as a whole yet to materialize. Policy uncertainty, private deleveraging, fiscal drag, impaired credit intermediation, and a still incomplete rebalancing of global demand continue to weigh on global growth prospects. Medium-term challenges are also present in many economies, including those related to fiscal sustainability and financial stability. 4. We have agreed that while progress has been made, further actions are required to make growth strong, sustainable and balanced. Some countries have taken steps to stimulate activity since we last met. In particular, Japan’s recent policy actions are intended to stop deflation and support domestic demand. In addition, Korea announced an active macroeconomic policy package. However, much more is needed to fulfill our commitment to address the ongoing weakness in the global economy. Major policy priorities remain largely the same. In the euro area the foundations of economic and monetary union should be enhanced, including through an urgent movement towards banking union, further reducing financial fragmentation, and continued strengthening of banks’ balance sheets. Further progress toward a balanced medium-term fiscal consolidation plan is necessary for the United States, although significant deficit reduction has already been achieved. Japan should define a credible medium-term fiscal plan. Large surplus economies should consider taking further steps to boost domestic sources of growth. We will continue to implement ambitious structural reforms to increase our growth potential and create jobs. 5. Maintaining fiscal sustainability in advanced economies remains essential. Advanced economies will develop medium-term fiscal strategies by the time of the St Petersburg Summit in line with the commitments made by our Leaders in Los Cabos. We will present and review our strategies at our next meeting. 6. We reiterate our commitments to move more rapidly toward more market-determined exchange rate systems and exchange rate flexibility to reflect underlying fundamentals, and avoid persistent exchange rate misalignments. We will refrain from competitive devaluation and will not target our exchange rates for competitive purposes, and we will resist all forms of protectionism and keep our markets open. We reiterate that excess volatility of financial flows and disorderly movements in exchange rates have adverse implications for economic and financial stability. Monetary policy should be directed toward domestic price stability and continuing to support economic recovery according to the respective mandates of central banks. We will be mindful of unintended negative side effects stemming from extended periods of monetary easing. International Financial Architecture 7. Completing the ongoing reforms of IMF governance is indispensable for enhancing its credibility, legitimacy and effectiveness. For this reason the ratification of the 2010 IMF Quota and Governance Reform is urgently needed. We support the IMF Executive Board’s decision to integrate the process of reaching a final agreement on a new quota formula with the 15th General Review of Quotas. We remain committed, together with the whole IMF membership, to agree on the quota formula and complete the 15th General Quota Review by January 2014 as agreed at the Seoul Summit and reiterated in Cannes and Los Cabos. We attach high importance to securing continued progress in meeting this objective, including on key elements at the September St Petersburg Summit and subsequently at the October 2013 G20 Ministerial and IMFC meetings. We reaffirm our previous commitment that the distribution of quotas based on the formula should better reflect the relative weights of IMF members in the world economy, which have changed substantially in view of strong GDP growth in dynamic emerging market and developing countries. We reaffirm the need to protect the voice and representation of the IMF poorest members as part of this General Review of Quotas. 8. In pursuit of our goal of strengthening the existing practices of public debt management, we ask the IMF and the World Bank to consult with their members regarding the implementation and a possible review of the “Guidelines for Public Debt Management”. This will help ascertain if amendments are required to take into account, among other things, evolution in the issuance environment and the emergence of complex interactions between public debt management, monetary and fiscal policies. We look forward to an update on this work by our July meeting and a progress report to the Leaders’ Summit in September. We also note the ongoing work of the OECD to review leading practices for raising, managing and retiring public debt. We welcome the ongoing efforts to strengthen the Fund’s public debt sustainability analysis framework for market-access countries, which is focused on key risks from high debt burden and its profile, macro-fiscal developments, and contingent liabilities. We expect that this will complement our work on medium term fiscal strategies. 9. We reaffirm the important role that Regional Financing Arrangements (RFAs) can play in the global financial safety nets. Further facilitating the dialog among RFAs, as well as strengthening cooperation and increasing complementarities between the IMF and RFAs, while safeguarding the independence of the respective institutions, could support financial stability and thus help promote growth. We note the IMF work on stocktaking of its engagement with RFAs, as well as the recent G20/IMF seminar that reviewed developments in RFAs and explored options for enhancing their cooperation with the IMF. Starting from this basis, and building on the principles for IMF-RFA cooperation we agreed in Cannes, we will discuss possible ways to further enhance that cooperation at our next meeting, in order to assess possible options for further policy recommendations by the time of the Leaders’ Summit in St Petersburg. 10. We will contribute to a successful International Development Association (IDA) 17 replenishment, as well as African Development Fund (AfDF) 13 replenishment. Long-term Financing for Investment 11. We underscore the importance of long-term financing for investment, including in infrastructure, in enhancing economic growth and job creation. We are taking forward work on this issue, including through adoption of the Terms of Reference of the new G20 Study Group, with inputs envisaged from the World Bank Group, OECD, FSB, IMF, UN, UNCTAD, and from participating countries. These inputs will cover their experience and good practices in creating the necessary conditions for mobilizing long-term financing for investment and promoting a sound investment climate. We will consider the Study Group’s work plan and any additional policy recommendations later this year. We welcome progress by the OECD on the High Level Principles for long-term investment financing by institutional investors and look forward for a report by our next meeting. Financial Regulation 12. Half of G20 jurisdictions have now issued final regulations to implement Basel III, and the remainder commits to do so as soon as possible in 2013. We welcome the assessments, in some cases initial and ongoing, by the Basel Committee on Banking Supervision of consistency of these regulations with its framework and look forward to further progress on ensuring the conformity of the regulations with the Basel III text. We look forward to the July report on comparability of risk-weighted assets. We will undertake the necessary legislative steps to implement resolution powers and tools consistent with the FSB’s Key Attributes of Effective Resolution Regimes, including the legal basis for cross-border cooperation and coordination. Our objective is to allow authorities to resolve financial institutions in an orderly manner. The FSB will report to the St Petersburg Summit on the progress made towards ending “too big to fail”. We note the progress in implementation of OTC derivatives reforms and we are committed to complete the remaining legislative and regulatory frameworks for these reforms. We look forward to the macroeconomic impact study of OTC regulatory reforms, which is underway. We urge the key regulators to intensify their efforts to address cross-border derivatives issues and report by our July meeting specific and practical recommendations to resolve by the St Petersburg Summit remaining cross-border conflicts, inconsistencies, gaps and duplicative requirements. We also call for a feasibility study on how information from trade repositories can be aggregated and shared among authorities, so as to enable comprehensive monitoring of risks to financial stability. Jurisdictions should remove barriers to trade reporting by market participants, with particular attention to removing barriers to reporting of counterparty information and to information access by authorities. We look forward to further policy recommendations for the oversight and regulation of the shadow banking sector by the Leaders’ Summit. We support the Regulatory Oversight Committee of the Legal Entity Identifier (LEI) initiative in their efforts to launch the Global LEI Foundation as soon as possible. We reiterate our call on the IASB and FASB to finalize by the end of 2013 their work on key outstanding projects for achieving a single set of high-quality standards. 13. We welcome the work of the BIS and IOSCO to improve the oversight and governance frameworks for financial benchmarks, and call on the FSB to coordinate and guide work on the necessary reforms to short-term interest rate benchmarks and to report in July on progress towards oversight and governance frameworks for financial benchmark reform for consideration at the Summit. We support the launch of the FSB’s peer review on national authorities’ steps to reduce reliance on credit rating agencies’ ratings, and ask for a status report including the work by standard setting bodies to be presented to the Leaders at the St Petersburg Summit. We take note of the IOSCO Report on Transparency and Competition Among Credit Rating Agencies. We ask the FSB to examine the need for further work in this area in the light of current domestic and regional regulatory initiatives. 14. More needs to be done to address the issues of international tax avoidance and evasion, in particular through tax havens, as well as non-cooperative jurisdictions. We welcome the Global Forum’s report on the effectiveness of information exchange. We commend the progress made by many jurisdictions, but urge all jurisdictions to quickly implement the recommendations made, in particular the 14 jurisdictions, where the legal framework fails to comply with the standard. Moreover, we are looking forward to overall ratings to be allocated by year end to jurisdictions reviewed on their effective practice of information exchange and monitoring to be made on a continuous basis. In view of the next G20 Summit, we also strongly encourage all jurisdictions to sign or express interest in signing the Multilateral Convention on Mutual Administrative Assistance in Tax Matters and call on the OECD to report on progress. We welcome progress made towards automatic exchange of information which is expected to be the standard and urge all jurisdictions to move towards exchanging information automatically with their treaty partners, as appropriate. We look forward to the OECD working with G20 countries to report back on the progress in developing of a new multilateral standard on automatic exchange of information, taking into account country-specific characteristics. The Global Forum will be in charge of monitoring. We welcome the progress made in the development of an action plan on tax base erosion and profit shifting by the OECD and look forward to a comprehensive proposal and a substantial discussion at our next meeting in July. 15. We reiterate our support for FATF work, notably the identification and monitoring of high-risk jurisdictions with strategic AML/CFT deficiencies. We must tackle the risks raised by opacity of legal persons and legal arrangements, and encourage all countries to take measures to ensure they meet the FATF standards regarding the identification of the beneficial owners of legal persons, other corporate vehicles and trusts, that is also relevant for tax purposes. Financial Inclusion 16. We welcome the launch of the Financial Inclusion Support Framework. We welcome the upcoming Seminar on “Women and Finance” and the launch of the Women’s Finance Hub hosted by the SME Finance Forum, which will provide best practices and knowledge sharing. We call on the Global Partnership for Financial Inclusion to report on the gaps and challenges in the global environment for SME finance, as well as potential policy responses, by our July meeting. We welcome the Financial Action Task Force’s revised Guidance on Financial Inclusion as an important step in helping to create an enabling regulatory environment for innovative financial inclusion. |
| ForexLive Americas wrap: USD/JPY storms back Posted: 19 Apr 2013 01:47 PM PDT Forex trading headlines for the US session on April 19, 2013:
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| Bersani will resign after Presidential vote Posted: 19 Apr 2013 01:33 PM PDT Centre-Left leader Bersani told members of his party that he will resign after a President is elected. It’s hard to imagine a new leader will have an easier time forming a coalition with Berlusconi, but Silvio works in mysterious ways. The Wall Street Journal breaks down what the split in the Left means. They also note this, which is probably why Berlusconi has stopped negotiating:
Think this is a usual period in Italian politics? Think again:
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| US Treasury official says EU needs to speed up banking union Posted: 19 Apr 2013 01:18 PM PDT
Sounds like Europe is under some pressure to loosen the purse strings. At the Toronto G20 a few years ago, all the focus was on curbing government debt by almost any means; times have changed. |
| Italy’s Bersani could resign at any moment – Senator Posted: 19 Apr 2013 12:59 PM PDT An Italian Senator is saying on Twitter that Centre-Left leader Bersani could resign “in a few minutes.”
According to Google translate, that means: In a few minutes @ pbersani will resign before the assembly of electors The knives have been out for Bersani since election day. Despite winning the most votes, his coalition was expected to perform more strongly and the inability to push through a President may have been the final straw. There have been rumors about his resignation this week so it’s not a shock but I would expect some EUR selling — the market seems to be comatose here. h/t to Alberto Nardelli for the heads up |
| Euro shorts slashed in latest CFTC data Posted: 19 Apr 2013 12:35 PM PDT Futures market speculative positioning data from the CFTC as of the close on Tuesday:
One interesting side note is gold, where net long rose to 129K from 120K despite the collapse on Monday. With the yen it looks like specs used the weakness on Monday to load up, and that helps explain the quick rebound in USD/JPY. It’s odd to see such a sharp drop in EUR longs when the currency hasn’t made a big move. I suspect the close above the 55-dma and a number of other levels on Tuesday sparked the liquidation. For more historical data, check out this handy tool. |
| The biggest mover this week wasn’t the one you’d expect Posted: 19 Apr 2013 12:22 PM PDT Or maybe it was, but I was surprised to see that the US dollar was the top performer this week while the Australian dollar was the laggard. AUD/USD fell 2.16% on the week but 90% of the move was on Monday. The weekly chart shows the pair well-within the 8-month range but the quick failure of a test at 1.06 points to a downside bias.
The decline in risk appetite and the heavy skew toward AUD longs among speculators were the culprits for this week’s decline. |
| The wheels fall off the copper market but it may not be what it seems Posted: 19 Apr 2013 11:25 AM PDT I’m a big fan of copper and base metals as leading indicators for the global economy but with copper falling to the lowest since Oct 2011, I have some reservations. There are numerous supply issues, along with warehouse hoarding. China has been stockpiling copper for years and the new government may have shifted policy. I’m not saying I would fight it but I take it with a grain of salt. |
| Japan’s Aso: G20 understands BOJ easing is to end deflation Posted: 19 Apr 2013 11:00 AM PDT Japanese Finance Minister Taro Aso says Bank of Japan easing is in line with what the G20 agreed. Update: Similar comment from BOJ Governor Kuroda who says he told the BOJ’s monetary easing targets domestic policies and is aimed at 2% in roughly 2 years. The market is taking the comments as a positive sign and USD/JPY has touched a fresh high of the day at 99.52. More offers at 99.70. |
| Draghi reminds Schaeuble the ECB is independent Posted: 19 Apr 2013 10:52 AM PDT Earlier, German finance minister Schaeuble said the ECB should reduce liquidity in the eurozone. Schaeuble is acting a bit strange today. |
| Schaeuble: No worries, it’s only democracy at stake Posted: 19 Apr 2013 10:40 AM PDT Germany’s finance minister Wolfgang Schaeuble says Europe would not be able to withstand another crisis like 2008 without democracy getting into danger. Here’s a tip: Maybe if Germany wasn’t such a hardass with the periphery governments, there wouldn’t be so many people in the streets. |
| Posted: 19 Apr 2013 10:32 AM PDT Daft Punk is back with some new material after an 8-year absence. It’s a good song for a Friday night. |
| Russian minister says FX was less of a concern than Feb G20 Posted: 19 Apr 2013 10:30 AM PDT Finance Minister Siluanov says the G20 agreed that greater monitoring is needed on the side effects of Japanese quantitative easing. Overall, it looks like that FX is falling off the agenda. |
| G20 pledges to be mindful of negative effects of monetary easing Posted: 19 Apr 2013 10:15 AM PDT G20 communique headlines on Bloomberg:
No reaction to the headlines as it’s the same old rhetoric from the G20. The main headline is a slight step further but ‘be mindful’ isn’t exactly a tape bomb. Full text of the communique on FX:
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| UK taking fight against financial transaction tax to court Posted: 19 Apr 2013 10:01 AM PDT Britain has lodged a challenge at the European Court of Justice against the proposed eurozone financial transaction tax. George Osborne made the announcement at the sidelines of the G20 and the papers were filed ahead of yesterday’s deadline.
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| Italy fails to elect President on fourth try Posted: 19 Apr 2013 09:52 AM PDT Romano Prodi was didn’t gain enough votes to win the nomination for President. No signs the political stalemate in Italy will end any time soon. Update: A fifth ballot will be held on Saturday. |
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