Economic Calendar

Economic indicators are among the most closely watched pieces of news in the investment world. Practically every week there is some announcement that affects investors' predictions about the future of the economy. Leading indicators are those which are believed to change in advance of changes in the economy, giving you a preview of what is going to happen before the change actually occurs. (There are also coincident indicators, which change about the same time as the overall economy, and lagging indicators, which change after the overall economy, but these are of minimal use as predictive tools.) In addition, the Fed watches many of these indicators as it decides what to do about interest rates. For these reasons, these indicators are important to investors. Below we have summarized some of the major indicators and how you can keep tabs on the latest data.

The interest rate is the yearly price charged by a lender to a borrower in order for the borrower to obtain a loan. This is usually expressed as a percentage of the total amount loaned. The proportion of a sum of money that is paid over a specified period of time in payment for its loan. It is the price a borrower has to pay to enjoy the use of cash which he does not own, and the return a lender enjoys for deffering his consumption or parting with liquidity. The rate of interest is a price that can be analysed in the normal framework of demand and supply. The interest rate is determined by demand and supply: the demand for present control of resources by those who do not have it, and the supply from those who do have control and are willing to surrender it for a price. The question of exactly why demand and supply yield a positive rate of interest is one of the most fiercely disputed questions in the history of economic theory. It is enough to point out that when an individual acquires present command of resources, his or her set of available opportunities expands. In short, the present command of resources is something that people want. Therefore, those who get it are willing to pay for it, and those who give it up insist that they be compensated for doing so.

Great Britain
Repo rate
The interest rate that the Bank of Englands Monetary Policy Committee uses to set monetary policy. In setting the repo rate, the Bank of England examines the risk of inflation as well as economic activity. In general, other countries and traders have their own version of a repo rate, which is the interest rate set on repurchase agreements in which a securities holder sells the securities to an investor with an agreement to repurchase them at a fixed price on a fixed date.

USA
Federal funds rate
The fed funds rate is the primary tool that the Federal Open Market Committee uses to influence interest rates and the economy. Changes in the fed funds rate have far-reaching effects by influencing the borrowing cost of banks in the overnight lending market, and subsequently the returns offered on bank deposit products such as certificates of deposit, savings accounts, and money market accounts. Changes in the fed funds rate and the discount rate also dictate changes in the Wall Street Journal Prime Rate, which is of interest to borrowers. The prime rate is the underlying index for most credit cards, home equity loans and lines of credit, auto loans, and personal loans. Many small business loans are also indexed to the Prime rate. The 11th District Cost of Funds is often used as an index for adjustable-rate mortgages.

Euro Zone
Refinancing tender rate
Refinancing tender rate ECB. Variable rate tenders. Minimum bid rate. On 8 June 2000 the ECB announced that, starting from the operation to be settled on 28 June 2000, the main refinancing operations of the Eurosystem would be conducted as variable rate tenders. The minimum bid rate refers to the minimum interest rate at which counterparties may place their bids. ECB interest rate policy Interest rate decisions are taken by the ECB�s Governing Council. From January 1999 the ECB uses 3 main official interest rates. The ECB deposit rate provides a lower bound or floor for the daily European Overnight Interbank Average (EONIA) market rate. The ECB marginal lending rate provides an upper bound or ceiling for the daily EONIA. The third main official interest rate relates to the ECB�s main refinancing operations (MROs). MROs are weekly auctions to commercial banks of central bank money (alternatively referred to as bank reserves, reserve money, outside money, monetary base) using repurchase agreements of standard 2-week maturity. In a fixed rate tender the ECB predetermines the repo interest rate, invites bids from commercial banks for their individual desired volumes of central bank money, and finally allocates central bank money proportionally to all bidding banks in such a way as to achieve a certain aggregate volume. In a flexible rate tender the ECB invites commercial banks to provide bids for different combinations of interest rates and volumes, subject to a lower bound for the interest rate (the minimum rate). The ECB allocates central bank money to commercial banks with interest rate bids above a selected rate (the marginal rate), in such a way as to achieve a certain aggregate volume. All successful banks pay the interest rate of their successful bids and the total effective interest rate for the flexible rate tenders is the weighted average rate (which normally exceeds the minimum rate and marginal rate).

Japan
Overnight call rate target
Release Explanation: This is the interbank overnight lending rate. It sets the tone for mortgages, commercial loans, and all economic lending criteria. An increase in Interest Rate will have the effect of slowing economic growth. A decrease in Interest Rate is used by a Central Bank to stimulate economic growth. Economic strength can create Inflation, raising Interest Rates is one of the easiest ways to contain Inflation. The Governments Finance Ministry dominate the Bank, whatever they want they get. Trade Desk Thoughts: The Bank of Japan decided to cut the Overnight Call Rate, down to 0.30%. This comes, after the bank had kept the interest rate at 0.50% for almost two years, the lowest rate amid industrialized countries. Economists argue that the rate cut, will not provide strong relief to the Japanese economy. The Japanese economy faces an increasing risk from the strength the yen has posted lately, hurting the economy�s engine -exports, and a falling stock market. Latest indicators suggest the Japanese economy might be facing a recession, something that has caused the central bank to switch its focus to downside risks Forex Technical Reaction: The yen had a strong response to the news release. The yen fell 100 pips since the Asian session began, from which 50 pips were from around the release time. Against the euro, the yen fell 90 pips while against the pound it moved flat. Written by TheLFB Trade Team, � 2007-2008 LFB Services, LLC. All rights reserved.

Switzerland
3 month libor range.
Swiss National Bank decided to set and maintain the 1.00 wide range for 3 month LIBOR on CHF to control short-term interest rates level. (LIBOR, London Interbank Offered Rate, is an interest rate at which large banks place lending in the London interbank money market. LIBOR rates are set for different periods and on different instruments. LIBOR is fixed at 11:00 each day, London time, and is an average of the last ten quotations offered by sellers) High interest rates decrease consumer lending growth rates and stimulate savings increase, which triggers economic development slowdown. However, speculations on rates hikes usually trigger consumer lending boom. Rates hikes usually trigger capital inflow increase and national currency advance in the mid-term perspective. Still they may trigger economic stagnation and negative impact on the exchange markets in the long-term plan in case rates hikes are not based on high economic growth rates.

Canada
Overnight rate target
Overnight Rate Target is the interest considered by BoC to be the average one in the transaction account market. Overnight rate target is the main rate in Canada. To control interest rates level on the overnight market BoC sets the so-called 0.50 width operational range, which mid is the overnight rate target High interest rates decrease consumer lending growth rates and stimulate savings increase, which triggers economic development slowdown. However, speculations on rates hikes usually trigger consumer lending boom. Rates hikes usually trigger capital inflow increase and national currency advance in the mid-term perspective. Still they may trigger economic stagnation and negative impact on the exchange markets in the long-term plan in case rates hikes are not based on high economic growth rates.

New Zealand
Official Cash Rate
The Official Cash Rate (OCR) is the interest rate set by the Reserve Bank to meet the inflation target specified in the Policy Targets Agreement. The agreement signed in September 2002, between the Minister of Finance and the Governor of the Reserve Bank, requires the Reserve Bank to keep inflation, on average over the medium term, at between 1 and 3 percent per annum. The OCR was introduced in March 1999 and is reviewed eight times a year by the Bank. Monetary Policy Statements are issued with the OCR on four of those occasions. Unscheduled adjustments to the OCR may occur at other times in response to unexpected or sudden developments, but to date this has occurred only once, following the 11 September 2001 attacks on the World Trade Centre in New York.The OCR influences the price of borrowing money in New Zealand and provides the Reserve Bank with a means of influencing the level of economic activity and inflation. An OCR is a fairly conventional tool by international standards. In the past, the Reserve Bank used a variety of tools to influence inflation, including influencing the supply of money and signalling desired monetary conditions to the financial markets. Such mechanisms were more indirect, more difficult to understand, and less conventional. Most registered banks hold settlement accounts at the Reserve Bank, which are used to settle obligations with each other at the end of the day. For example, if you write out a cheque or make an EFT-POS payment, the money is paid by your bank to the bank of the recipient. Many hundreds of thousands of such transactions are made every day. The Bank pays interest on settlement account balances, and charges interest on overnight borrowing, at rates related to the OCR. These rates are reviewed from time to time, as is the OCR. The most crucial part of the system is the fact that the Reserve Bank sets no limit on the amount of cash it will borrow or lend at rates related to the OCR. As a result, market interest rates are generally held around the Reserve Bank�s OCR level. The practical result, over time, is that when market interest rates increase, people are inclined to spend less on goods and services. This is because their savings get a higher rate of interest and there is an incentive to save; and conversely, people with mortgages and other loans may experience higher interest payments. When people save more or spend less, there is less pressure on prices to rise, and therefore inflation pressures tend to reduce. Although the OCR influences New Zealand�s market interest rates, it is not the only factor doing so. Market interest rates - particularly for longer terms - are also affected by the interest rates prevailing offshore since New Zealand financial institutions are net borrowers in overseas financial markets. Movements in overseas rates can lead to changes in interest rates even if the OCR has not changed.

Australia
Official Cash Rate
The Reserve Bank of Australia (RBA) is responsible for formulating and implementing monetary policy. The Board's obligations with respect to monetary policy are laid out in the Reserve Bank Act 1959. Section 10(2) of the Act, which is often referred to as the Bank's 'charter', says: "It is the duty of the Reserve Bank Board, within the limits of its powers, to ensure that the monetary and banking policy of the Bank is directed to the greatest advantage of the people of Australia and that the powers of the Bank ... are exercised in such a manner as, in the opinion of the Reserve Bank Board, will best contribute to: the stability of the currency of Australia; the maintenance of full employment in Australia; and the economic prosperity and welfare of the people of Australia." Since 1993, these objectives have found practical expression in a target for consumer price inflation, of 2-3 per cent per annum. Monetary policy aims to achieve this over the medium term and, subject to that, to encourage strong and sustainable growth in the economy. Controlling inflation preserves the value of money. In the long run, this is the principal way in which monetary policy can help to form a sound basis for long-term growth in the economy. Monetary policy decisions involve setting the interest rate on overnight loans in the money market. Other interest rates in the economy are influenced by this interest rate to varying degrees, so that the behaviour of borrowers and lenders in the financial markets is affected by monetary policy (though not only by monetary policy). Through these channels, monetary policy affects the economy in pursuit of the goals outlined above. Further details on these and other aspects of monetary policy are provided below. The Monetary Policy Framework As discussed above, monetary policy's principal medium-term objective is to control inflation. In line with previous understandings between the Government and the Reserve Bank, issued in the form of several statements on the conduct of monetary policy from 1996 onwards, in the Statement on the Conduct of Monetary Policy issued in 2007 the Governor and the Treasurer agreed that the appropriate target for monetary policy is to achieve an inflation rate of 2-3 per cent on average, over the cycle, which is a rate sufficiently low that it does not materially distort economic decisions in the community. The inflation target is thus the centrepiece of the monetary policy framework. It provides discipline for monetary policy decision-making, and serves as an anchor for private sector inflation expectations.