Are We Seeing an Escalation of Currency War?
Yesterday's focus was very much on central banks and here in the UK we had a chance to meet our next BoE Governor, who is due to take office in July.
The FTSE was initially boosted by his comments but ultimately gave back its gains.
The sterling-dollar spread betting
market simply strengthened as he made it clear that he is going to make some changes at the Bank.
He wants to give the BoE a wider remit, focussing on boosting employment and growth as well as keeping inflation intact, which would more closely align the Banks responsibilities with those across the pond.
What this signals is a likely increase in the part that central banks will pay going forward and, no doubt, an escalation of the so called 'currency war'.
Strong Euro Could Cause Problem for the Eurozone Recovery
US markets remain near their year's highs despite the comments by ECB President Mario Draghi that a strong euro could make a Eurozone economic recovery harder to achieve.
Whilst the comments did worry US investors a little, initially sending the Dow Jones
more than 100 points lower, it was not enough to cause mass selling and the index recovered to close only 40 points down at 13,944.
In Europe, the bulls are looking interested again following yesterday's fall, with the FTSE
up by some 35 points to 6265.
It seems that it'll take a lot more selling than the little bit we've seen so far this week to reverse the uptrend that's formed since the New Year.
By Angus Campbell - 8 February 2013
Are We Seeing an Escalation of Currency War? - Part 2
Update - 18 February 2013
Well if we can take anything away from this weekend's G20 summit, it's that there are no concerns about a currency war.
The Japanese yen has resumed its slide lower against all the other majors and the USD/JPY market
is back near its highs above ¥94.
This has boosted Asian stocks, particularly the Nikkei 225
, as all their major exporting companies breathe a huge sigh of relief.
The roughly 20% fall in the yen is what these exporters have been crying out for and the aggressive monetary stance of the new Japanese Prime Minister is having the desired effect so far.
However, to fuel the sort of inflation that they want to see, the yen has got a lot further to go.
This is just another chapter in the book of 'currency wars' and, despite the protestations from some corners of the globe, there was little in the way of abject criticism from the G20. As a result, we're likely to see the Bank of Japan continue to print heavily.
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By Angus Campbell, 8 February 2013