Today we were granted with yet another speech from Fed Governor Bernanke, where he referred to the Fedâ€™s communication strategy as â€œa work in progress.â€ (â€˜Way to be definitive.) The main goal of this particular speech was to inform the public how he and the FOMC are going to increase transparency. Bernanke stressed that the only effect an increase in transparency would have is allowing the public to see the intricacies of the monetary policy formulation, and would not change the formulation in any way. The reports would show the same results and would not be any more accurate. The Fed Governor is clearly a technician, quoting and referring to charts, graphs and numbers. He looks at things and communicates in a completely different way than his predecessor Greenspan. So now that itâ€™s out there for the whole world to see, what next? Will this open book business help our competing economies keep an edge, or will the information become so overplayed, that most of it could end up being ignored?
Numbers released today were PPI, Core PPI, Retail Sales, and Business Iinventories. PPI came out lower than the previous 1.1 percent and 0.2 percent lower than expected, at 0.1 percent, while core PPI was unchanged. Retail Sales dropped 0.4 percent from the previous report, but on par with expectations at a slight increase of 0.2 percent.
Business Inventories were all up in reports released at 9 AM CST. The combined value of distributorâ€™s trade sales and manufacturerâ€™s shipments for September rose 0.6 percent from August. Manufacturerâ€™s and trade inventories were up 0.4 percent from August for this year. The total business inventories/sales ratio based on seasonally adjusted data at the end of September was 0.27 percent.
Though many believed the U.S. Fed was alone in world economies when it came to rate cuts, Turkey has kept the United States company. The Turkish Central Bank has cut rates three times in the past three months. Most recently, the Turks lowered their overnight rate by 50 basis points on expectations inflation will fall.
Though the Dollar Index has managed to make a slight recovery from the all time low of 75.02, the U.S. currency was unable to break above 76 during todayâ€™s session, but seems to be giving an attempt at an advance. The Japanese Yen fell to its lowest level in three days. In fact, the Yen fell against 15 of the 16 most traded currencies. Some of the small recoveries reduced the need for investing in the Yen and allowed the Yen to correct slightly from the recent surge higher. I view this as a correction. I think long term we may have seen a bottom to the Yen.
Though the UK announced real GDP was up 3.3 percent in the third quarter compared to a year ago, the British Pound took a hit in todayâ€™s traffic. Traders are most likely reacting by selling the Cable on the possibility of inflation, and the announcement by the Bank of England implying it may cut interest rates next year. Meanwhile, the Euro stays strong the new world leader in currencies.
This should help the Dollar a bit. While other countries may waiver on their currency preferences, China is holding firm and saying that the Dollar is and will continue to be it main currency in holdings. The assistant governor of Chinaâ€™s central bank, Yi Gang, informed a panel at the Cato Institute in Washington that its policy is to align its â€œtrade and FRI and clearance and settlement,â€ all of which are largely done with the Dollar.
This report may include information garnered from the following sources: CBOT, Bloomberg, Reuters, Interactive Investor, Cattle Network, Earth Times, AgReport, Aol Money, CNN Money, Market Watch, The Forex Market, Yahoo Finance, FXsol, Financial Times, iWon, Report on Business, Crainâ€™s, Dow Jones Newswire, Nasdaq News, INO News, The Hightower Report.
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