Re: Today in the economy
3/3/09
Canada - Interest Rate Statement
Actual
0.50%|Forecast
0.50%|Previous
1.00%
Eight times per year the Bank of Canada (BOC) Governing Council meets to set the nation's short term interest rate (i.e., "overnight rate"). Shortly after the meeting they release a statement that contains the decided rate, a brief commentary of the economic conditions that effected their decision, and most importantly, clues regarding the outcome of future meetings. The decision on where to set interest rates depends mostly on inflation. The primary objective of the central bank is to achieve price stability; when inflation rises above an annualized rate of approximately 2%, they will respond by raising interest rates in an attempt to bring prices down. A rising trend in interest rates has a positive effect on the nation's currency. Short term rates are the paramount factor in currency valuation; traders look at most other indicators merely to predict how interest rates may change in the future. High interest rates attract foreigners looking for the best "risk-free" return on their money, which can dramatically increases demand for the nation's currency.
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Australia - GDP
Actual
-|Forecast
0.10%|Previous
0.10%
Gross Domestic Product (GDP) determines the total worth of all goods and services produced by the economy. GDP is the broadest measure of activity and the primary gauge of the economy's health. To foreign investors, a strong economy is viewed favorably as it spurs investment opportunities in the domestic stock and bond markets. More importantly, the central bank is more likely to raise interest rates in the face of a strong and growing economy. The combination of these effects can have a large impact on the demand for the country's currency. An upward trend has a positive effect on the country's currency.
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USA - Bernanke testifies
Ben Bernake, US federal reserve chairman will be testifying before a house panel regarding America's economic outlook and financial markets.
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EU - Trichet speaks
European Central Bank (ECB) President Jean-Claude Trichet will hold a press conference after the bi-monthly Bank for Intercountryal Settlements (BIS) meeting, in Basel. As head of the ECB's governing body, which is responsible for setting the euro zone's short term interest rate, his speeches can sometimes cause market volatility as Currency traders react to clues regarding future monetary policy.
For every story told that divides us, I believe there are a thousand untold that unite us.
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