Once again the machines have been given more fuel to fight the overnight currency battle which drags the futures along with it. Futures popped a bit here on news out of bloomberg “China May Delay Rate Increases”.
Things are a bit disconnected tonight, you had the EUR/USD moving down hard as the ES_F rose sharply. They are back out of divergence as i type this. Though the EUR/JPY is really moving to the upside. GO figure.
(Bloomberg writes) “China’s accelerating inflation may fail to convince policy makers to raise interest rates this year because food costs, not surging credit, are fueling price gains.
The benchmark one-year lending rate will remain at 5.31 percent, with the deposit rate at 2.25 percent, according to the median estimates in Bloomberg News surveys of economists after August economic data released Sept. 10-11. The yuan may gain about 1.4 percent to 6.65 per dollar, the forecasts also show.
China, the world’s biggest exporter, may wait for signs of a stronger international recovery before increasing rates from crisis levels. Premier Wen Jiabao said this week that while the Asian nation is in “good shape,” the global economy has yet to enter “a benign cycle of steady growth.”
“A move on interest rates will do little to bring more pigs to market,” said Tom Orlik, a Beijing-based analyst for Stone & McCarthy Research Associates who formerly worked for the U.K. Treasury. Food prices are “the villain of the piece,” he said.
Among 19 economists surveyed, 13 forecast that borrowing costs will be unchanged this year. A majority also expect no increase in the deposit rate. Most analysts see higher rates by the end of the first half of next year.”