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Tag Archives: Currency War

Yes, the Dollar is Above CNY7.0, but No, the Sky is Not Falling

The world's two great powers are at loggerheads.  Chinese nationalism meet your sister, US nationalism.  Import substitution strategy of Made in China 2025 meet your cousin Make America Great Again.   Paradoxically, or dialectically, the similarities are producing divergent interests that extend well beyond economics and trade policy.  Consider that the intermediate-range nuclear missile treaty between the US and Russia did not prevent China from building up such weapons.  Now that...

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Cool Video: The implication of CNY7.0+

President Trump's tweets last week announcing the end of the tariff truce signaled a new phase in the US-Chinese tensions.  China responded as did investors.  I was fortunate to have been invited to the Bloomberg set to discuss the issues of the day.   In this two-minute clip, I suggest there will be far-reaching implications for investors.  World growth is getting marked down as deflationary forces strengthen.  The dollar-yuan was a low vol pair, and it still is, but considerably...

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Prospects of a No-Deal Brexit Weigh on Sterling

Overview:  Unrest in Hong Kong and disappointing earnings reports from South Korea weighed on local equity markets, and the MSCI Asia Pacific Index fell for the third consecutive session.  European equities are edging higher in tentative trading.  The Dow Jones Stoxx 600 is firmer for the sixth session of the past seven.  US shares are little changed after record-high closes before the weekend.  Benchmark 10-year bond yields are mostly one or two basis points lower.  Sterling's...

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Intervention: Huff, Puff, and Bluff

Economists, strategists, and reporters continue to have a difficult time getting a handle on the disruptive American President.  They insist on taking seriously every feint of a person who appears to relish keeping his friends and adversaries off-balance. One continues to fuel a discussion that is generating more heat than light.  Previously, Trump accused one or another country of currency manipulation.  Yet, his own Treasury Department, which has softened the criteria, has not cited...

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The Yuan and Tariffs

Consensus thinking sees two levers.  One is the US tariff, and the other is the weakness of the Chinese yuan. They talk as if China may be depreciating the yuan, or tolerating a weaker yuan to offset the tariffs.  This feeds the fear that China can escape from US pressure and supports those favoring an aggressive confrontation with China.   The view is both mistaken and naive.   Many observe that the yuan and the Mexico peso weakened after the US imposed or threatened to impose...

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FX Manipulation: To Take Trump Seriously Means not Literally

Marc to Market: FX Manipulation: To Take Trump Seriously Means not Literally Diese Website verwendet Cookies von Google, um ihre Dienste bereitzustellen, Anzeigen zu personalisieren und Zugriffe zu analysieren. Informationen darüber, wie du die Website verwendest, werden an Google weitergegeben. Durch die Nutzung dieser Website erklärst du dich damit einverstanden, dass sie Cookies verwendet.Weitere InformationenOK Loading

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Initial Thoughts on Draghi

ECB President Draghi was unable to arrest the US dollar's slide and euro's surge.  But he did not try particularly hard.  While many investors are a bit stumped by the pace and magnitude of the dollar's slump, Draghi seemed to imply that it was perfectly understandable given the recovery of the eurozone economy.  The economy is the strongest it has been in more than a decade, but the US is no slouch.  The US reports the first official estimate of Q4 GDP tomorrow January...

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Draghi’s Dilemma – Why Is the Euro Still Gaining Against the Dollar?

Authored by Daniel Lacalle via The Mises Institute, The primary purposes of the incorrectly named “unconventional monetary policies” are to debase the currency, stoke inflation, and make exports more competitive. Printing money aims to solve structural imbalances by making currencies weaker. In this race to zero in global currency wars, central banks today are “printing” more than $200 billion per month despite that the financial crisis passed a long...

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Now, A Trade War; Next A Shooting War?

Authored by James Rickards via The Daily Reckoning, A popular thesis since the 1930s is that a natural progression exists from currency wars to trade wars to shooting wars. Both history and analysis support this thesis. Currency wars do not exist all the time; they arise under certain conditions and persist until there is either systemic reform or systemic collapse. The conditions that give rise to currency wars are too much debt and too little growth. In those circumstances, countries try...

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IMF Drops Pledge To “Resist All Forms Of Protectionism”

One month after a startling reversion by the G-20 finance ministers and central bankers, who during their latest meeting in Baden-Baden dropped a decade-long tradition of rejecting protectionism and endorsing free trade, pressured by Trump's delegate Steven Mnuchin, the IMF has done the same, and according to a communique from the IMF’s steering committee released on Saturday in Washington echoed the G-20 reversal, and said that officials “are working to strengthen the contribution of trade...

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