Dollar recovers mildly today as sentiments are hurt by S&P's downgrade of some world's largest financial institutions, including some big US lenders like Bank of America, Citigroup, Goldman Sachs Group, JPMorgan Chase, Morgan Stanley and Wells Fargo. Top UK banks include Barclays, HSBC holdings, Lloyds Banking Group and Royal Bank of Scotland. This is part of the progress that of rating revisions on criteria changes the rating agency announced a year ago. Earlier this month, S&P said that updated ratings would be rolled out gradually for more than 750 banking companies worldwide, starting from the biggest banks. Overall, in this revision, 15 of the largest banks were downgraded, 20 left unchanged and 2 where upgraded (Bank o China and China Construction Bank Corp). This is much worse than S&P has predicted before, a 20% drop of banks to have ratings cut.
Also, sentiments are weighed down by comments from a PBoC adviser in the monetary policy committee, Xia Bin, who said that China plans only to "fine-tune" its policy stance, not loosening monetary policy. He emphasized that fine-tuning doesn't mean loosening "credit controls", "overall liquidity", nor "easing property controls". That's about "reasonable" money supply growth but not at recent years' double digit rate. And, fine-tuning also involve reallocation of financial resources.
Eurozone finance ministers agreed to leverage EFSF by introducing two options, sovereign bond partial risk protection and a co-investment approach. The fixed credit protection will be at 20-30% with a certificate to newly issued bond of a member state, aiming at improving demand for newer bonds and lowering yields. The Co-Investment Funds would also combining public and private funding for purchase bonds in the primary and secondary markets. Meanwhile the next trance of bailout fund for Greece, at EUR 8b, was endorsed as widely expected after numerous postponement.
Fed Vice Chairman Yellen continued her dovish comments and noted yesterday that Fed has "some scope for action" to provide additional accommodation through :additional purchases of long term financial assets". She said Fed is also "actively considering" to provide "greater clarity" on the pledge to keep rates low till at least mid-2013. Meanwhile, Atlanta Fed Lockhart said he's skeptical on the effect of further asset purchase on economic activity. Fed will release the Beige Book economy report later today.
Also, sentiments are weighed down by comments from a PBoC adviser in the monetary policy committee, Xia Bin, who said that China plans only to "fine-tune" its policy stance, not loosening monetary policy. He emphasized that fine-tuning doesn't mean loosening "credit controls", "overall liquidity", nor "easing property controls". That's about "reasonable" money supply growth but not at recent years' double digit rate. And, fine-tuning also involve reallocation of financial resources.
Eurozone finance ministers agreed to leverage EFSF by introducing two options, sovereign bond partial risk protection and a co-investment approach. The fixed credit protection will be at 20-30% with a certificate to newly issued bond of a member state, aiming at improving demand for newer bonds and lowering yields. The Co-Investment Funds would also combining public and private funding for purchase bonds in the primary and secondary markets. Meanwhile the next trance of bailout fund for Greece, at EUR 8b, was endorsed as widely expected after numerous postponement.
Fed Vice Chairman Yellen continued her dovish comments and noted yesterday that Fed has "some scope for action" to provide additional accommodation through :additional purchases of long term financial assets". She said Fed is also "actively considering" to provide "greater clarity" on the pledge to keep rates low till at least mid-2013. Meanwhile, Atlanta Fed Lockhart said he's skeptical on the effect of further asset purchase on economic activity. Fed will release the Beige Book economy report later today.
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