The IPCC May Have Outlived its Usefulness – An Interview with Judith Curry

As the global warming debate increases in its intensity we find both sides deeply entrenched, hurling accusations and lies at one another in an attempt to gain the upper hand. This divide within the scientific community has left the public wondering who can be trusted to provide them with accurate information and answers.

The IPCC, the onetime unquestioned champion of climate change, has had its credibility questioned over the years, firstly with the climategate scandal, then with a number of high profile resignations, and now with the new “Gleickgate” scandal (1) (2) – One has to wonder where climate science goes from here?

Oilprice.com just had the pleasure of interviewing the well known climatologist Judith A. Curry in order to get her thoughts on climate change, the IPCC, geo-engineering, and much more. The original interview can be found at Oilprice.com

Judith is the current chair of the School of Earth and Atmospheric Sciences at the Georgia Institute ofTechnology and hosts sensible discussions on climate change at her popular blog Climate, etc.

Considered somewhat of a black sheep within the scientific community Judith was a one time supporter of the IPCC until she started to find herself disagreeing with certain policies and methods of the organization. She feared the combination of groupthink and political advocacy, combined with an ingrained “noble cause syndrome” stifled scientific debate, slowed down scientific progress, and corrupted the assessment process.

OilPrice.com: What are your personal beliefs on climate change? The causes and how serious a threat climate change is to the continued existence of society as we know it.

Judith Curry: The climate is always changing. Climate is currently changing because of a combination of natural and human induced effects. The natural effects include variations of the sun, volcanic eruptions, and oscillations of the ocean. The human induced effects include the greenhouse gases such as carbon dioxide, pollution aerosols, and land use changes. The key scientific issue is determining how much of the climate change is associated with humans. This is not a simple thing to determine. The most recent IPCC assessment report states: “Most [50%] of the warming in the latter half of the 20th century is very likely [>90%] due to the observed increase in greenhouse gas concentrations.” There is certainly some contribution from the greenhouse gases, but whether it is currently a dominant factor or will be a dominant factor in the next century, is a topic under active debate, and I don’t think the high confidence level [>90%] is warranted given the uncertainties.

As I stated in my testimony last year: “Based upon the background knowledge that we have, the threat does not seem to be an existential one on the time scale of the 21st century, even in its most alarming incarnation.”

OilPrice.com: You have said in the past that you were troubled by the lack of cooperation between organizations studying climate change, and that you want to see more transparency with the data collected. How do you suggest we encourage/force transparency and collaboration?

Judith Curry: We are seeing some positive steps in this regard. Government agencies that fund climate research are working to develop better databases. Perhaps of greatest interest is the effort being undertaken by the Berkeley Earth Surface Temperature project, which is a (mostly) privately funded effort to compile and document a new data base on surface temperatures, in a completely open and transparent way.

OilPrice.com: Do you feel climatologists should be putting more effort into determining the effect of the sun on our climate? As the IPCC primarily focuses on CO2 as the cause of climate change – Is the importance of CO2 overestimated and the importance of the sun is underestimated?

Judith Curry: I absolutely think that more effort is needed in determining the effect of the sun on our climate. The sun is receiving increased attention (and funding), and there is a lively debate underway on interpreting the recent satellite data record, reconstructing past solar variability, and predicting the solar variability over the 21st century. Nearly all of the solar scientists are predicting some solar cooling in the next century, but the magnitude of the possible or likely cooling is hotly debated and highly uncertain.

OilPrice.com: You are well known in climate and energy circles for breaking from the ranks of the IPCC and questioning the current information out there. What do you see as the reasons for the increase in skepticism towards global warming over the last few years.

Judith Curry: Because of the IPCC and its consensus seeking process, the rewards for scientists have been mostly in embellishing the consensus, and this includes government funding. Because of recent criticisms of the IPCC and a growing understanding that the climate system is not easily understood, an increasing number of scientists are becoming emboldened to challenge some of the basic conclusions of the IPCC, and I think this is a healthy thing for the science.

OilPrice.com: What are your views on the idea that CO2 may not be a significant contributor to climate change? How do you think such a revelation, if true, will affect the world economy, and possibly shatter public confidence in scientific institutions that have said we must reduce CO2 emissions in order to save the planet?

Judith Curry: Personally, I think we put the CO2 stabilization policy ‘cart’ way before the scientific horse. The UN treaty on dangerous climate change in 1992 was formulated and signed before we even had ‘discernible’ evidence of warming induced by CO2, as reported in 1995 by the IPCC second assessment report. As a result of this, we have only been considering one policy option (CO2 stabilization), which in my opinion is not a robust policy option given the uncertainties in how much climate is changing in response to CO2.

OilPrice.com: There has been quite a bit of talk recently on geo-engineering with entrepreneurs such as Bill Gates and Richard Branson pushing for a “plan B” which utilizes geo-engineering to manipulate the environment in order to cool the atmosphere.

Geo-engineering could be much cheaper than reducing emissions, and also much quicker to produce results and scientists are lobbying governments and international organizations for funds to experiment with various approaches, such as fertilizing the oceans or spraying reflective particles and chemicals into the upper atmosphere in order to reflect sunlight and heat back into space. What are your thoughts on geo-engineering? Is it a realistic solution to solving climate change or is it a possible red herring?

Judith Curry: With regards to geo-engineering, there are two major concerns. The first is whether the technologies will actually work, in terms of having the anticipated impact on the climate. The second is the possibility of unintended consequences of the geoengineering.

OilPrice.com: You have been noted to criticize the IPCC quite openly in the past on several topics. Even going so far as to say:“It is my sad conclusion that opening your mind on this subject (climate change controversy) sends you down the slippery slope of challenging many aspects of the IPCC consensus.”

Do you believe that the organization as a whole needs to be assessed in order to better serve progress on climate change? What suggestions do you have on how the organization should function?

Judith Curry: The IPCC might have outlived its usefulness. Lets see what the next assessment report comes up with. But we are getting diminishing returns from these assessments, and they take up an enormous amount of scientists’ time.

OilPrice.com: Would renewable energy technologies have received the massive amounts of funding we have seen over the last few years without global warming concerns?

Judith Curry: I think there are other issues that are driving the interest and funding in renewables, including clean air and energy security issues and economics, but I agree that global warming concerns have probably provided a big boost.

OilPrice.com: What do you believe are the best solutions to overcoming/reversing climate change; is a common consensus needed in order to effectively combat climate change?

Judith Curry: The UN approach of seeking a global consensus on the science to support an international treaty on CO2 stabilization simply hasn’t worked, for a variety of reasons. There are a range of possible policy options, and we need to have a real discussion that looks at the costs, benefits and unintended consequences of each. Successful solutions are more likely to be regional in nature than global.

OilPrice.com: I saw an interesting comment on another site regarding climate science that i thought i’d get your opinion on as it raises some very interesting arguments:

Climate science has claimed for 30 years that it affects the safety of hundreds of millions of people, or perhaps the whole planet. If it gets it wrong, equally, millions may suffer from high energy costs, hunger due to biofuels, and lost opportunity from misdirected funds, notwithstanding the projected benefits from as yet impractical renewable energy.

Yet, we have allowed it to dictate global policy and form a trillion dollar green industrial complex – all without applying a single quality system, without a single performance standard for climate models, without a single test laboratory result and without a single national independent auditor or regulator. It all lives only in the well known inbred, fad-driven world of peer review.

Judith Curry: I agree that there is lack of accountability in the whole climate enterprise, and it does not meet the standards that you would find in engineering or regulatory science. I have argued that this needs to change, by implementing data quality and model verification and validation standards.

OilPrice.com: Do you believe that the language used in papers and at conferences is a problem? The public just wants straight answers to questions: Is the climate warming, By how much, and what will the effects be? Scientists need to step out from behind the curtain and engage the public with straight answers and in their own words. Is this achievable, or is climate science too complex to be explained in laymen’s terms? Or is it because even climate scientists can’t agree on the exact answers?

Judith Curry: I think the biggest failure in communicating climate science to the public has been the reliance on argument from consensus. We haven’t done a good job of explaining all this, particularly in the context of the scientific disagreement

OilPrice.com: What resources would you recommend to people who wish to get a balanced and objective view on climate science and climate change.

Judith Curry: There is no simple way to get a balanced and objective view, since there are so many different perspectives. I think my blog Climate Etc. at judithcurry.com is a good forum for getting a sense of these different perspectives.

 Interview by. James Stafford, Editor Oilprice.com

 

 

Long-Term Treasury Bonds, Century Bonds, and Other Bad Ideas


View the Investment U Video Archive

In focus: China makes a big shift in their bond strategy, South American banks worth owning, a 100-year-maturity bond and the SITFA 

China’s Bonds

China knows you can lose money in Treasuries, but most investors do not. Most investors think that a guaranteed U.S. government bond means you can’t lose. Not true!

China very recently got rid of a lot of long-maturity Treasury bonds for shorter maturities; they sold $9.2 billion of long bonds and bought $38.2 billion of shorter maturities.

They did this for exactly the same reasons I have been pounding the table in my bond articles for the past year; when rates move up in this country, and they will, long-maturity bonds of all kinds and long-maturity bond funds will get crushed! This will be a real blood bath!

All bonds will drop in value when rates move up, there is no way around that, but the shorter maturity bonds, I like a five-year average or less, will drop a lot less than the higher paying long maturities.

You could see a 12% to 15% drop in the market value of a 30-year Treasury with as little as a one-point increase in rates. And, as you move out of the guaranteed bonds to munis and corporates, that drop will be even greater.

Keep your average maturity below the five-year mark and you can limit this drop by about as much as 50%.

The beauty of bonds is that no matter what happens to rates, or the market value of your bonds, you still get paid your interest and the principal at maturity. But, as we all know, as soon as an investor sees a drop in value on their statements they sell at a loss. It’s crazy, but true.

By limiting the downside of your bonds and bond funds, (actually, with very few exceptions I am opposed to bond funds in this market, too many problems you can’t see), but by limiting your downside you keep the unavoidable panic selling to a minimum and you end up making money.

With bonds, you have to be there at the end of the race to make any money. Sell as soon as the market drops and you might as well have given the money to your brother in law.

The Chinese seem to have a good handle on money. Do what they do, shorten your maturities now! 

100 Years is a Very Long Time

While we’re on bonds, recently a 100-year maturity bond, called a century bond, was issued by California. 100 years. And, here’s the best part, it only pays 4.858% yield. That’s peanuts!

Beside the fact that you’ll get killed with a capital “K” in this thing, who can possibly justify tying up your money for 100 years for 4.858%? It’s just stupid.

Please tell me none of our members bought this!

This is one of about four of this type of bond issued in the past year or so, Burlington Northern did one, Norfolk Southern, MIT and USC, but they are rare.

They are a great deal for the issuer. They lock you in at a pitiful rate for the maturity, at the bottom of the rate curve and every owner will be dead when it matures. Crazy!

Wait a year or so and you’ll be 4.858% from a five-year tax-free muni. People are panicking to get income from anywhere and will do just about anything, even something this stupid, to get something, anything on their money.

Most buyers of this type of bond are pension funds and insurance companies, but you know there will be some retired person who’s getting a half of a percent on their money markets who will see 4.858% and jump on it. Don’t be one of them. 100 years is very long time. 

South American Banks

According to a recent MarketWatch article, while most of the banking world is still struggling to recover from the collapse, South American banks are steaming!

According to the article, the growth and strength in these banks has been fueled by a growing middle class that has had a big increase in per capita income; it’s up 56% in just 10 years, and it’s also benefiting from greater efficiency and an expanding loan portfolio.

The best of this group, Brazilian banks! They occupy the top five spots on the Banker’s List, and Itau Unibanco, Brazil’s largest bank, has its eye on the increasing cross country business in South America, and, according to the CEO, Roberto Setubal, it is rapidly expanding outside of Brazil.

Capital markets are expanding rapidly in both Columbia and Peru, and even the mature markets, Brazil and Chile, have very high growth rates. Latin American banks have also pushed developed country banks out of the top positions in retail and investment banking.

The one exception, Spain’s Banco Santander! It has increased its penetration in the Mexican market and has been building a presence in Chile, Uruguay and Argentina.

Banking in South America, take a look at it.

And Finally the SITFA

This week it goes to the life insurance folks at the Hartford, who, according to a Smart Money article, gave a $20-million life insurance policy to a 78-year-old woman.

You heard that right, a 78-year-old woman bought a $20-million life insurance policy, $20 million!

That’s crazy enough, but the really amazing part, top executives signed off on it in less than 30 minutes.

The Hartford figured she will live another 14 years and pay $1 million per year in premiums, and, according to a Hartford spokesman they could make a tidy profit on the deal.

For the sake of their careers in the life insurance business, I hope they’re right. This could be a real career ender if they’re wrong!

$20 million is a lot of insurance. Her beneficiaries must be loving this!

Article by Investment U

Gold Below 200-Day Average, Technical Analysts Point Below $1600

London Gold Market Report
from Adrian Ash
BullionVault
Weds 7 March, 08:45 EST

THE WHOLESALE SILVER and gold price rallied from 6-week lows Wednesday morning in Asian and London, recovering 2.1% and 1.0% respectively as world stock markets also bounced.

Crude oil recovered from a 2-week low at $105 per barrel, but the European single currency failed to hold an early rise ahead of Thursday’s Greek debt-restructuring deadline.

Germany today reported a sharp drop in new factory orders, down almost 5% year-on-year in January.

Private-sector US payrolls rose faster last month than analysts forecast, up by 216,000 on today’s ADP report.

The official US Non-Farm Payrolls report – often a volatile event for currencies and the gold price – is due Friday.

“Another medium term top has been formed [in the gold price],” reckons technical analyst Axel Rudolph in London for Commerzbank, ” with further weakness to be seen in the coming months, taking gold towards the 1600/1500 region.”

“Big picture, the 3.5 year bullish trend line is now seen at $1591,” says Russell Browne at Scotia Mocatta.

“We expect sellers now on any move back to $1700.”

“With sentiment now on very shaky ground, it’s hard to identify where a floor might arise,” says UBS strategist Edel Tully.

The gold price “needs physical demand to step in, and in size,” she believes, “otherwise further downside seems inevitable.”

Today in India  – world No.1 for end-user demand – “Demand is pretty good as traders are finding these prices attractive,” Reuters quoted one Mumbai gold dealer.

Tuesday afternoon saw gold fall below the average of its last 200 London PM Fixes for the first time since mid-December.

Seen earlier this week as “very strongly supporting” the gold price by some chart analysts, the 200-day moving average – now at $1672 – has exceeded the Dollar price on fewer than 11% of all trading days in the past 10 years.

“On [Tuesday’s] move, the best part of $1.5 million ounces changed hands,” notes Swiss dealer MKS Finance of the action in gold futures contracts.
Altogether, the open interest in US gold futures has shrunk by 6.2% over the last week, the same proportion as lost by the Dollar gold price.

Gold bullion holdings at the $71 billion SPDR Gold Trust were unchanged last night at 3-month highs near 1294 tonnes. Globally, gold ETF holdings ticked higher on Tuesday to a fresh record of 2406 tonnes according to Bloomberg.

“Gold has an out-sized mind share. It’s a teeny tiny asset class,” said strategist and author Barry Ritholtz to Daily Ticker on Tuesday.

“There are times to be bullish [on gold], there are times to be bearish and there are times to just watch,” writes trading tipster Dennis Gartman in the latest edition of his eponymous letter.

“We shall probably join the Bugs again eventually on the aggressive long side of gold but not right now.”

In Berlin today, Angela Merkel’s coalition government moved to ratify the European Fiscal Pact agreed without the UK or Czech Republic last week in Brussels.

It will need opposition support to achieve the two-thirds majority required. Data from the Netherlands and a speech by the Spanish prime minister have already said those EU members will breach the government deficit limit (4.4% of GDP) set by the pact.

Last night the Greek government warned bondholders who don’t agree to a 75% write-down of their investment that it “does not contemplate the availability of funds” to pay them anything.

Societe Generale SA, France’s second-largest bank, today said it will participate in the restructuring, joining 6 of Greece’s biggest banks as well as Italy’s Unicredit.

Athens needs 95% of its creditors to agree to the debt swap, aimed at cutting its obligations by €100 billion.

Adrian Ash
BullionVault

Gold price chart, no delay   |   Buy gold online at live prices

Adrian Ash is head of research at BullionVault, the secure, low-cost gold and silver market for private investors online, where you can buy gold today vaulted in Zurich on $3 spreads and 0.8% dealing fees.

(c) BullionVault 2012

Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it.

 

Euro-Zone Worries Bring EUR/USD to Two-Week Low

Source: ForexYard

The euro dropped to a two-week low against the US dollar during European trading yesterday, as ongoing fears regarding Greece’s upcoming debt swap have boosted safe-haven assets. Other riskier currencies, like the AUD, tumbled throughout the day as well. The AUD/USD dropped over 100 pips yesterday, to reach a one-month low at 1.0571. Today, in addition to any announcements out of the euro-zone, traders will want to pay attention to the US ADP Non-Farm Employment Change figure. A better than expected figure could help the USD extend its recent gains.

Economic News

USD – US ADP Non-Farms Figure Likely to Generate Volatility Today

The US dollar shot up against most of its main currency rivals yesterday, as an increase in risk aversion helped boost the safe-haven currency. Fears regarding the upcoming Greek debt swap sent the EUR/USD to a two-week low at 1.3129, while the NZD/USD hit a six-week low at 0.8122. The dollar also benefited from a generally upbeat attitude towards the US economic recovery, which was reinforced following Monday’s better than expected ISM Non-Manufacturing PMI.

Turning to today, the US ADP Non-Farm Employment Change figure may generate significant market volatility. The figure is considered a valid predictor of Friday’s all-important Non-Farm Payrolls report, and investors will be carefully watching the indicator for clues as to the current state of the US employment sector. US employment has seen steady gains in recent months. If today’s figure shows additional growth occurred in February, the dollar may be able to extend its recent bullish trend. That being said, a worse than expected figure may generate doubts in the US economy and weigh down on the USD.

EUR – Greek Debt Fears Once Again Turn EUR Bearish

The Greek debt crisis once again weighed down on the euro during yesterday’s trading session. The common-currency dropped as low as 1.3129 against the USD to reach a two-week low. Additionally, the EUR/JPY dropped over 160 pips over the course of the day, reaching as low as 106.17 before staging a mild upward correction. Analysts attributed the bearish euro to fears that Greece will not be able to successfully complete a debt-swap before the end of this week. Greece needs to complete the debt swap before it is able to receive a bailout it needs to avoid defaulting on its debt later this month.

Turning to today, euro traders will want to continue paying attention to any announcements out of the euro-zone. Without definitive evidence that the Greek debt situation will improve, analysts are warning that riskier assets, like the euro, may remain bearish for the foreseeable future. That being said, should positive euro-zone news be released today, risk taking will likely increase and the euro may be able to regain some of its recent losses. Additionally, euro traders will want to pay attention to US employment news set to be released later today. A positive figure may result in the dollar gaining further on the common-currency.

JPY – Safe-Haven Yen Gains amid Risk Aversion

The Japanese yen moved up against most of its main rivals yesterday, as risk aversion in the marketplace caused the currency to recoup some of its recent losses. Ongoing fears regarding the euro-zone debt crisis brought the EUR/JPY close to the 106.00 level during European trading. Meanwhile, against the US dollar, the yen gained some 75 pips before staging a correction during the afternoon session.

Today, the US ADP Non-Farm Employment Change figure may result in significant volatility for the yen. Should the figure come in above expectations, the USD/JPY may reverse yesterday’s downward trend. Additionally, a better than expected US employment figure may lead to an increase in risk taking, which could benefit the euro against the JPY. At the same time, if pessimism in the Greek debt situation remains today, safe-haven currencies like the yen may continue to gain.

Crude Oil – Euro-Zone Fears Continue to Bring Oil Lower

The price of crude oil continued to drop yesterday, as the euro-zone debt crisis has once again caused investors to revert to safe-haven assets. Tensions in the Middle East, which until recently have kept the price of oil abnormally high, appear to have calmed down for the moment. While the dispute over Iran’s nuclear program have yet to be resolved, the prospect for another war in the region appears to be decreasing for the time being. The price of oil dropped below $105.00 a barrel during European trading yesterday as a result of the news.

Today, the price of oil may continue to fall providing a key US employment indicator shows improvement in the US economy and boosts the USD. A bullish USD typically means that oil, which is priced in dollars, becomes less attractive to international buyers and drops in value. That being said, any positive euro-zone news could result in increased risk taking in the marketplace and boost oil prices.

Technical News

EUR/USD

The daily chart’s Williams Percent Range has dropped into oversold territory, indicating that the pair could see some upward movement. That being said, most other technical indicators place this pair in neutral territory. Traders may want to take a wait and see approach, as a clearer trend is likelier to present itself in the near future.

GBP/USD

Most long term technical indicators show this pair range trading at the moment. The weekly chart’s Relative Strength Index is at 50, while the Williams Percent Range on the same chart has dropped below -20. Taking a wait and see approach for the pair may be the best option.

USD/JPY

Long term technical indicators show this pair may have finally hit overbought territory following weeks of upward movement. The weekly chart’s Slow Stochastic appears to be forming a bearish cross, while the Williams Percent Range is currently at -10. Traders may want to go short in their positions.

USD/CHF

Technical indicators on the daily chart show this pair may move into overbought territory in the near future. The Williams Percent Range is hovering close to the -20 level, while the Slow Stochastic may be forming a bearish cross. Traders will want to keep an eye on these two indicators for signs of impending downward movement.

The Wild Card

EUR/GBP

A bullish cross appears to be forming on the daily chart’s Slow Stochastic, indicating that upward movement could occur in the near future. Additionally, the Relative Strength Index on the 8-hour chart is in oversold territory and angling upward. Forex traders may want to go long in their positions ahead of an upward breach.

Forex Market Analysis provided by ForexYard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.

 

Euro finds support at 1.3120 with bearish outlook


By TraderVox.com

Recent rout of the single currency got some breather today but it failed to gain levels. It only managed not to slide till now. It is currently trading around 1.3125, up about 0.10% for the day. The support may be seen at 1.3210 and below at 1.3160. The resistance may be seen at 1.3260 and 1.3300. Factory orders from Germany came below the expectation at -2.7% month over month. The expected value of 0.5%.

The Sterling Pound is also trading in green albeit marginally for 0.07% for the day. It is curently quoting around 1.5725. Yesterday it fell below 1.5700 levels during the US session briefly. The tone  in the pair is bearish. The support may be seen at 1.5820 and 1.5780/90 levels. The resistance may be seen at 1.5880 and 1.5930 levels.
 
The USD/CHF pair has come off the lows and is currently trading near the opening price at 0.9180, down about 0.1% for the day. The support may be seen at 0.9150 and below at 0.9110. The resistance may be seen at 0.9180/90 and above at 0.9250 levels. The unemployment rate came at 3.4% in line with the expectation.
 
The USD/JPY is approaching the 81 levels from the low of` 80.57. It is currently trading around 80.70, still down about 0.23%. The support may be seen at the current levels and below at 80.35. The resistance may be seen at 80.90 and 81.40 levels. Leading economic index came below expectation at 94.9 below expectation of 95.1. The coincident index also came at 93.1, below expectation of 95.
 
The AUD/USD is trading around 1.0555, marginally up for the day. The pair has lost the 1.0600 handle and the bearish outlook is very much in tact. The support now may be seen at 1.0500 and below at 1.0450. The resistance may be seen at 1.0590/0600 and 1.0650 levels.
The US dollar index is trading around 79.80.

Article provided TraderVox.com
Tradervox.com is a Forex News Portal that provides real-time news and analysis relating to the Currency Markets.
News and analysis are produced throughout the day by our in-house staff.
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Reserve Bank of Australia High Intervention Threshold


By TraderVox.com

Tradervox.com (Dublin) – The Reserve Bank of Australia’s threshold for intervening to temper with the gains in the local dollar is “quite high” according to officials who are monitoring the impact of a stronger currency on the labor market. The Deputy Governor of RBA Philip Lowe indicated today. Further, he added that it is tricky to make a sturdy case against the exchange rate that has been maintained by the central bank. The nation’s strong economy status has affected the decision of the RBA officials to keep the intervention hurdle quite high.

The Aussie has been the best performer for the last six months among a group of ten currencies. The good economic status has been boosted by investment in the mining industry which has grown tremendously. In turn, the Reserve Bank of Australia has maintained the highest benchmark rate among all major developed economies. Lowe said that the high interest rate is an indication of the country’s high terms of trade and a measure of export prices relative to import cost.

Against the US dollar, the Australian dollar was little unchanged at $1.0550 which is close to six weeks low. Yesterday, the Aussie registered its weakest level at $1.0525 since January 26. The Reserve Bank of Australia maintained the interest rates at 4.25 percent for the second month as it noted that it has capacity to reduce borrowing costs as Europe remains a possible source of shocks.

Lowe also said in a report that the persistent increase in the unemployment rate suggests that contractionary effect of the high exchange rate is offsetting the expansionary effect of the investment boom. He indicated that if this turns out to be true, the monetary policy would be able to respond as far as inflation outlook remained positive.

Lowe also defended the high interest rates claiming that this is what is needed to maintain macroeconomic stability. He also added that the high interest rate and exchange rate in relation to the rest of the world are influenced by the fact that Australian economy is benefiting from the chance in the world relative prices.

 

Disclaimer
Tradervox.com is not giving advice nor is qualified or licensed to provide financial advice. You must seek guidance from your personal advisors before acting on this information. While we try to ensure that all of the information provided on this website is kept up-to-date and accurate we accept no responsibility for any use made of the information provided. Opinions expressed at Tradervox.com are those of the individual authors and do not necessarily represent the opinion of Tradervox.com or its management. 

Article provided TraderVox.com
Tradervox.com is a Forex News Portal that provides real-time news and analysis relating to the Currency Markets.
News and analysis are produced throughout the day by our in-house staff.
Follow us on twitter: www.twitter.com/tradervox

Kiwi and Aussie in a Tumble

Source: ForexYard

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The Australian dollar dropped to its lowest point in six months against the USD as investor uncertainty is still palpable throughout the market. There was a brief reprieve for the euro’s three week decline against the greenback but other riskier currencies have continued to decline. As of this morning the AUD was trading at $1.0568 against the USD, marking a six month low for the Australian dollar. The kiwi has been hovering around $0.8175 against the greenback, sticking to an overall downward trend that began last week.

Read more forex news on our forex blog.

Forex Market Analysis provided by ForexYard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.

Merck Sees Q1 EPS Below Estimates (MRK)

3-6-12-Merck (NYSE:MRK) announced that it sees Q1 EPS of $0.95 – $0.98, vs. estimates of $1.01.The company reaffirmed its 2012 adjusted EPS range of $3.75 – $3.85.and said it expects currency to hurt sales by 1% – 2% in the first quarter.It also expects annual revenue to be at or near 2011 levels on constant currency basis, down 2% – 3% at current exchange levels.Merck sees an adjusted tax rate of 2% – 25%.SmarTrend is bullish on shares of Merck and our subscribers were alerted to buy on November 30, 2011 at $35.50. The stock has risen 8.3% since the alert was issued.

Loonie Falls against USD as Global Risk Aversion Rises


By TraderVox.com

Tradervox.com (Dublin) – The Canadian dollar slid against its US counterpart for the third day running as concerns about the slowing global economy decreased the demand for higher-risk assets like stocks and commodities. The Canadian dollar fell through parity to C$1.0029 which is the weakest it has been since February 27. This came just two days before the country’s central bank officials meet to set interest rates. Canada’s crude oil export weakened after a report showing that the Europe’s economy shrunk in the fourth quarter.

According to Jack Spitz, a Managing Director of Foreign Exchange at National Bank of Canada, in Toronto indicated that investors should keep an eye on C$1.0050 level which if broken could lead “long Canadian-dollar squaring.” He also suggested that another night of risk paring would lead to this attempt tomorrow.

The Loonie fell by 0.7 percent against the US dollar to settle at C$1.0019 at 5 p.m. in Toronto. During the day, the Canadian dollar had dropped to 0.8 percent which is the lowest it has been on intraday trading since Feb. 10.

The Canadian dollar continues to drop due to factors such as the declining of the Europe’s economy by 0.3 percent in the fourth quarter; the data released yesterday showing that the US factory orders declined and China recording the lowest growth since 2004. This has forced the market to retreat putting risk appetite under pressure. Therefore, currencies related with risk appetite or commodities such as the Loonie are underperforming.

Some analysts are forecasting that the Bank of Canada will leave the interest rates at one percent where they have been since 2010. According to policy makers led by Mark Carney, there is a possibility that the growth in Canada and US will remain modest than it had been forecasted in October. Europe’s effort to contain the debt crisis will play a big role in maintaining this positive growth. According to some analysts, the Bank of Canada will not make any surprise decisions on it March 8 meeting hence the Canadian dollar might remain relatively steady.

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