Despite all sorts of policies introduced by central banks, we have not seen any significant improvement in the global economy.
This article was written by Michael Oyebamiji, an FX analyst with major focus on G-10 currencies.
A couple of days ago, the Reserve Bank of Australia cut interest rates to a record low of 1.50%, which was more than the 60% priced in by the market. According to the RBA, the low interest rate is an important factor which can be used to drive economic growth, enhance demand and eventually achieve some level of inflation.
It should be recalled that the RBA’s inflation target is 2%-3%. At the moment, the inflation rate in Australia is relatively low at 1.0% for Q2. Cutting interest rates is a policy tool used by many central banks to devalue their currency so as to boost exports and encourage spending.
The RBA cut interest rates in order to weaken the AUD, but we saw a strong rally on AUD shortly after this announcement, which was quite unbelievable. I was a bit surprised to see a strong rally on AUD/USD despite the rate cut and a dovish comment from the RBA.
Last night, the Royal Bank of New Zealand followed its counterpart in Australia in cutting rates to an all-time low of 2.0%. Just like the AUD, the kiwi rallied to reach a new 2016 high at 0.7340. This was also pretty much priced in by the market, which was anticipating a surprise cut of 50bps but the RBNZ disappointed and kept it moderate at 25bps. The bank's governor said that there is no need to cut lower than 25bps for now.
Markets have so far disappointed the RBA and RBNZ with how their currencies have reacted to their decisions. They wanted weak currencies to boost trade export and demand. Unfortunately the market is on another mission.
This is a strong indication that central bank policies have reached a level of diminishing marginal return. Monetary policies are no longer effective; this is similar to all major economies where interest rates have been cut to a record low.
Let us take a look at Japan; the Bank of Japan introduced the negative interest policy earlier in 2016 in an attempt to weaken the yen. So far, the yen is one of the strongest currencies in 2016.
Despite all sorts of policies introduced by central banks, we have not seen any significant improvement in the global economy. In fact, a recession seems to be around the corner.
In the last quarter, the US economy grew by 1.2%, missing the estimate of 2.6%. Considering the massive ongoing quantitative and qualitative easing going on in major economies right now, the real sector is not improving. It's stagnating, corporate profits are falling, and trade balance remains at a massive deficit in relative to GDP.
The only thing I can say that QE has done is that it has pushed up asset prices through continuous buy backs!
This article was written by Michael Oyebamiji, an FX analyst with major focus on G-10 currencies.
A couple of days ago, the Reserve Bank of Australia cut interest rates to a record low of 1.50%, which was more than the 60% priced in by the market. According to the RBA, the low interest rate is an important factor which can be used to drive economic growth, enhance demand and eventually achieve some level of inflation.
It should be recalled that the RBA’s inflation target is 2%-3%. At the moment, the inflation rate in Australia is relatively low at 1.0% for Q2. Cutting interest rates is a policy tool used by many central banks to devalue their currency so as to boost exports and encourage spending.
The RBA cut interest rates in order to weaken the AUD, but we saw a strong rally on AUD shortly after this announcement, which was quite unbelievable. I was a bit surprised to see a strong rally on AUD/USD despite the rate cut and a dovish comment from the RBA.
Last night, the Royal Bank of New Zealand followed its counterpart in Australia in cutting rates to an all-time low of 2.0%. Just like the AUD, the kiwi rallied to reach a new 2016 high at 0.7340. This was also pretty much priced in by the market, which was anticipating a surprise cut of 50bps but the RBNZ disappointed and kept it moderate at 25bps. The bank's governor said that there is no need to cut lower than 25bps for now.
Markets have so far disappointed the RBA and RBNZ with how their currencies have reacted to their decisions. They wanted weak currencies to boost trade export and demand. Unfortunately the market is on another mission.
This is a strong indication that central bank policies have reached a level of diminishing marginal return. Monetary policies are no longer effective; this is similar to all major economies where interest rates have been cut to a record low.
Let us take a look at Japan; the Bank of Japan introduced the negative interest policy earlier in 2016 in an attempt to weaken the yen. So far, the yen is one of the strongest currencies in 2016.
Despite all sorts of policies introduced by central banks, we have not seen any significant improvement in the global economy. In fact, a recession seems to be around the corner.
In the last quarter, the US economy grew by 1.2%, missing the estimate of 2.6%. Considering the massive ongoing quantitative and qualitative easing going on in major economies right now, the real sector is not improving. It's stagnating, corporate profits are falling, and trade balance remains at a massive deficit in relative to GDP.
The only thing I can say that QE has done is that it has pushed up asset prices through continuous buy backs!
Michael Oyebamiji is an FX Analyst with major focus on G-10 currencies. I write about the Financial market from a Traders perspective and macro view. An economist by profession, Fx trader by training
Webull Introduces "Lite" Version of Trading App for Retail Users
Network, Learn, Grow | FMAS:24
Network, Learn, Grow | FMAS:24
Get ready to mark your calendars for FMAS:24, returning this May! Take a quick glimpse of what awaits at the Sandton Convention Centre in Sandton, South Africa from May 20-22, 2024.
Don't miss out on this 5-second invite packed with energy and urgency!
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
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Get ready to mark your calendars for FMAS:24, returning this May! Take a quick glimpse of what awaits at the Sandton Convention Centre in Sandton, South Africa from May 20-22, 2024.
Don't miss out on this 5-second invite packed with energy and urgency!
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
📣 Stay updated with the latest in finance and trading!
Follow FMevents across our social media platforms for news, insights, and event updates. Connect with us today:
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Here's a sneak peek into the FMAS:24 vibrant atmosphere! Join us at Africa’s premium financial event for a transformative experience that combines the best of finance and technology.
From May 20-22, 2024, the Sandton Convention Centre in Sandton, South Africa, will be the hub for over 3,500 attendees to engage in unparalleled networking opportunities, learn from over 150 industry-leading speakers, and explore innovations from 120+ exhibitors.
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
📣 Stay updated with the latest in finance and trading!
Follow FMevents across our social media platforms for news, insights, and event updates. Connect with us today:
🔗 LinkedIn: https://www.linkedin.com/showcase/financemagnates-events/
👍 Facebook: https://www.facebook.com/FinanceMagnatesEvents
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Don't miss out on our latest videos, interviews, and event coverage. Subscribe to our YouTube channel for more!
Here's a sneak peek into the FMAS:24 vibrant atmosphere! Join us at Africa’s premium financial event for a transformative experience that combines the best of finance and technology.
From May 20-22, 2024, the Sandton Convention Centre in Sandton, South Africa, will be the hub for over 3,500 attendees to engage in unparalleled networking opportunities, learn from over 150 industry-leading speakers, and explore innovations from 120+ exhibitors.
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
📣 Stay updated with the latest in finance and trading!
Follow FMevents across our social media platforms for news, insights, and event updates. Connect with us today:
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Join 3500+ Attendees at FMAS:24 | Africa's Premium Financial Event
Join 3500+ Attendees at FMAS:24 | Africa's Premium Financial Event
Looking to expand your network in #Africa? Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
Sandton Convention Center, Sandton, South Africa
Register now to secure your spot: https://bit.ly/3JbUpCK
#fmas #fmas24 #fmevents #networking #finance #africa
📣 Stay updated with the latest in finance and trading!
Follow Finance Magnates for news, insights, and event updates across our social media platforms. Connect with us today:
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Looking to expand your network in #Africa? Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
Sandton Convention Center, Sandton, South Africa
Register now to secure your spot: https://bit.ly/3JbUpCK
#fmas #fmas24 #fmevents #networking #finance #africa
📣 Stay updated with the latest in finance and trading!
Follow Finance Magnates for news, insights, and event updates across our social media platforms. Connect with us today:
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Join 3500+ Attendees at FMAS:24 - Africa's Premium Financial Event
Join 3500+ Attendees at FMAS:24 - Africa's Premium Financial Event
Looking to expand your network in #Africa?
Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
Sandton Convention Center, Sandton, South Africa
Register now to secure your spot: https://bit.ly/3JbUpCK
#fmas #fmas24 #fmevents #networking #finance #africa
Looking to expand your network in #Africa?
Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
Sandton Convention Center, Sandton, South Africa
Register now to secure your spot: https://bit.ly/3JbUpCK
#fmas #fmas24 #fmevents #networking #finance #africa
Where the Prop Trading Industry Goes from Here | Finance Magnates Podcast
Where the Prop Trading Industry Goes from Here | Finance Magnates Podcast
Explore the tumultuous world of prop trading in this Finance Magnates podcast episode, featuring insights from Head of Axi Select, Greg Rubin.
We're discussing the challenges and shifts caused by MetaQuotes' pivotal decisions affecting MT4 and MT5 users, and how Axi Select offers a unique, realistic path to professional trading, steering clear of traditional prop firm pitfalls.
Tune in for expert analysis on the future of trading and innovative funding models.
The Axi Select programme is only available to clients of AxiTrader Limited. CFDs carry a high risk of investment loss. In our dealings with you, we will act as a principal counterparty to all of your positions. This content is not available for AU, NZ, EU and UK residents. For more information, refer to our Terms of Service. Standard trading fees apply.
This content is provided solely for general informational purposes and should not be construed as financial product advice or an investment recommendation. It has been prepared without considering your personal circumstances.
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Explore the tumultuous world of prop trading in this Finance Magnates podcast episode, featuring insights from Head of Axi Select, Greg Rubin.
We're discussing the challenges and shifts caused by MetaQuotes' pivotal decisions affecting MT4 and MT5 users, and how Axi Select offers a unique, realistic path to professional trading, steering clear of traditional prop firm pitfalls.
Tune in for expert analysis on the future of trading and innovative funding models.
The Axi Select programme is only available to clients of AxiTrader Limited. CFDs carry a high risk of investment loss. In our dealings with you, we will act as a principal counterparty to all of your positions. This content is not available for AU, NZ, EU and UK residents. For more information, refer to our Terms of Service. Standard trading fees apply.
This content is provided solely for general informational purposes and should not be construed as financial product advice or an investment recommendation. It has been prepared without considering your personal circumstances.
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