| November 2012 |
 |
 |
|
| ||||||
| Global financial market sentiment turned more mixed in October. Central bank activity was somewhat muted as both the ECB and the Federal Reserve made few changes to their policy stance. The ECB reiterated its willingness to provide support to the Eurozone bond markets, but that support remains conditional on a country requesting aid from the European financial aid funds. The EU Leaders’ Summit made partial progress on the banking union, while differences over the implementation timeline and the treatment of the ‘legacy’ banking assets were highlighted during the meetings. Global economic data |
| has shown some tentative hints of improvement. Although China’s growth
slowed further in Q3, high-frequency data suggested a pick-up in
activity in September. U.S. economic data also showed positive signs,
notably in the housing sector, but the underwhelming tone of corporate
earnings has taken some steam out of the U.S. equity markets. The improvement in European markets continued, albeit at a slower pace that during the previous month. Spanish ten-year yields fell by around 30bp to 5.60% as Spain avoided a credit rating downgrade to ‘junk’ status by Moody’s. Italian yields were down by around 20bp to 4.90%. Global equities have seen an up-and-down month, falling by around 1% overall. U.S. equities slipped by 2%, while ten-year Treasury yields were up some 20bp to around 1.80%. Expectations of further Bank of Japan policy easing weighed on the Japanese yen, which was the weakest G10 currency during the month. Commodity-bloc currencies were also lower, while the euro traded in a range. Emerging currencies were mixed, with Latin America generally underperforming relative to Asia and Eastern Europe. Americas U.S. economic data has offered some positive hints over the past month. Q3 GDP growth quickened to 2% q/q (annualized), in part thanks to a bounce in government spending. September nonfarm payrolls rose by 114,000 and the jobless rate fell to 7.8% thanks to a sizeable gain in the household measure of employment. There were further signs of a housing market pick-up, with September housing starts surging by 15% m/m to a four-year high, and homebuilder confidence rising for a sixth straight month. The September CPI quickened to 2% y/y both at the headline and the core. Following the announcement of further asset purchases in September, the Federal Reserve made no changes to its policy stance in October and made only modest revisions to its view on the economy. The Bank of Canada surprised the markets by offering only a mild softening of its hawkish bias at the October meeting, suggesting that some moderate removal of monetary stimulus may become appropriate “over time”. The central bank appeared to downplay the recent CPI data, which showed core inflation slowing to just 1.3% y/y in September. Canada’s job market was firing on all cylinders in September, registering a gain of more than 52,000 jobs. In Mexico, economic data has been mixed as August industrial output slowed to 3.6% y/y but retail sales quickened to 4.8% y/y. In Brazil, the central bank cut its Selic rate by 25bp to 7.25%, and signaled that rates would remain at a low level for an extended period. Chile’s central bank left rates at 5.00% and, given a strong domestic economy, should keep policy steady for some time. The Chilean peso was nevertheless the weakest regional performer, falling by around 1.5%, while the Mexican peso and Canadian dollar slipped by around 1%. Europe The euro and European markets more broadly were in a back-and-forth mode during the month as markets awaited the resolution of the Spanish and Greek uncertainties. The ECB October policy announcement had relatively limited market impact as the central bank left its Refi rate unchanged at 0.75% and repeated that the bond buying program would provide a fully effective backstop. At their October Summit, European leaders committed to a legal framework for a single Eurozone banking supervisor by the end of this year. While some differences remain regarding the speed of implementation, the banking supervisor is expected to become operational sometime in 2013. Eurozone economic data pointed to an ongoing economic contraction. The Eurozone October manufacturing PMI fell further to 45.3, while the services PMI rose slightly to 46.2. Meanwhile, Germany’s October IFO business confidence fell to a 2 ½ year low of 100.0. The UK GDP jumped by 1% q/q (non-annualized) in Q3 with some help from temporary factors. Recent data, as well as comments from Bank of England policymakers, have tempered expectations of further easing by the Bank of England, helping the pound reverse its earlier losses. The Swedish krona was down 2% as Sweden’s central bank left its policy rate unchanged at 1.25% but said that it was “more probable” that rates would be cut rather than raised over the winter. The Hungarian forint was the strongest performer in Eastern Europe with a 3% gain as the government said it will scrap a plan to tax financial transactions at the central bank and pledged further budget austerity measures. Social unrest weighed on the South African rand which fell by 4.5% in October. Asia Japanese economic trends have remained subdued. The Q3 Tankan survey showed the large manufacturers’ index falling to -3, while September exports slumped by 10.3% y/y. The Bank of Japan last left its policy stance unchanged but expectations are running high for a further increase in the central bank’s asset purchase target, and possibly other measures, at the next meeting. The Japanese yen slipped nearly 3% to a four-month low against the greenback. Meanwhile, recent Chinese data offered some tentative encouragement. The Q3 GDP slowed to 7.4% y/y, in line with expectations, but the September industrial output and retail sales both firmed, to 9.2% y/y and 14.2% respectively. Elsewhere in the region, Singapore’s central bank left its current policy stance intact, South Korea’s central bank cut rates by 25bp to 2.75% and the Philippines’ central bank cut rates by 25bp to 3.50%. The Philippine peso was one of the stronger regional performers however, gaining by more than 1%, as did the South Korean won. The Australian jobs data was somewhat mixed as September employment rose by 14,500 but the jobless rate climbed to 5.4%. The Reserve Bank of Australia unexpectedly cut its Cash Rate by 25bp to 3.25% in October and the language of the accompanying statement was potentially consistent with further easing. However, dovish expectations were subsequently scaled back somewhat by the Q3 CPI data, which showed headline inflation firming to 2% and core inflation firming to 2.4% y/y. The Reserve Bank of New Zealand left its policy rate unchanged at 2.50% and said rates remained appropriate for now, hinting at steady policy going forward. The Australian dollar saw a modest decline of around 0.5% while the NZ dollar was down by around 1% during the month. Listen to the Wells Fargo FX Express® Podcast! Click Here to listen to Nick Bennenbroek provide timely information and insights on the foreign exchange markets and global economy. World Headlines > Economic Calendar > Risks and Rewards > What's Hot > People Power > |
| Nick Bennenbroek Head of Currency Strategy Wells Fargo Foreign Exchange |
|
|
 |
|
| Opening doors to global payment strategies and solutions Wells Fargo is one of the few banks that can offer you a cost-effective means to efficiently disburse and receive global payments. With Wells Fargo’s Global ACH service, you can reduce the cost of moving funds, increase control over |
 |
| your cash
flow, and integrate your domestic and international cash management
systems. International ACH payments and collections are currently available for Canada
(either Canadian or U.S. dollars), Mexico, Europe1, Australia, Hong
Kong, India, New Zealand, and Singapore. How you benefit Reduced funds movement costs. Global ACH is the most cost-effective clearing method available, helping you to reduce your funds movement costs compared to wire transfers, foreign cash letters, checks, and drafts. More predictable cash flow. Global ACH eliminates the unpredictability of sending and receiving paper payment instructions because you designate exact dates for settlement. You can more accurately manage your accounts and maximize your use of available funds. Integrated disbursements. With Wells Fargo’s Global ACH credit origination, you can initiate payments with ease to vendors, employees, or shareholders living in the U.S. or the countries we serve. One-bank convenience. Wells Fargo eliminates the need to form foreign banking relationships because we provide complete format conversion as well as foreign exchange and settlement services through your existing Wells Fargo U.S. dollar or multi-currency account. You will not need to factor foreign exchange rates into each transaction prior to transmitting your file. Moreover, you can originate payments in either U.S. dollars or local foreign currency, including euros. Easy implementation. The international ACH service works the same way as Wells Fargo’s domestic ACH but with a foreign exchange component. You can send domestic and international payments to Wells Fargo in separate batches within one transmission. Multiple origination options. You have three methods of transferring your global ACH files to Wells Fargo.
Electronic return reporting. We present all of your returned/notification of change items electronically by fax, transmission, or through the CEO portal. Our 20-day item archive allows Wells Fargo to electronically match returned items with original transactions with an accuracy rate of 98 percent. This unique feature helps you reconcile returns, determine their causes and avoid them in the future. You receive a detailed returned items report by 9:00 a.m. Central Time (7:00 a.m. Pacific Time) each banking day. Fast confirmation. With Wells Fargo’s continuous processing environment, we provide confirmation notifications (CNotes) to all customers within 15 minutes of receipt of your ACH file. The confirmation verifies receipt of the file, notifies you that processing has begun, and indicates whether or not your file contains errors. Electronic document delivery (EDD). We can expedite the distribution of your complete payment information by email, secure email, fax, or data transmission in a variety of electronic file formats. How it works
1Europe includes: Austria France Liechtenstein Portugal Belgium Germany Lithuania Romania Bulgaria Greece Luxembourg Slovak Republic Cyprus Hungary Malta Slovenia Czech Republic Iceland Monaco Spain Denmark Ireland Netherlands Sweden Estonia Italy Norway Switzerland Finland Latvia Poland United Kingdom World Headlines > Economic Calendar > Risks and Rewards > What's Hot > People Power > |
|
