Tuesday, February 12, 2013

And the G7 speaks up on FX volatility

And the Group of Seven comes trying to dampen volatility in FX markets. At least verbally.
That means the DAX won't have policy makers on their side.
Or the KOSPI, or the South Korean Won.

My 2-cents.

We, the G7 Ministers and Governors, reaffirm our longstanding commitment to market determined exchange rates and to consult closely in regard to actions in foreign exchange markets. We reaffirm that our fiscal and monetary policies have been and will remain oriented towards meeting our respective domestic objectives using domestic instruments, and that we will not target exchange rates. We are agreed that excessive volatility and disorderly movements in exchange rates can have adverse implications for economic and financial stability. We will continue to consult closely on exchange markets and cooperate as appropriate.

Philipp Hildebrand, the former Swiss central banker, also had his voice heard at the FT - No Such Thing as Global Currency War

And from yesterday...

And... more, from the US Treasury's undersecretary for international affairs Lael Brainard... said she supports Japan's attitude towards ending deflation, to "reinvigorate growth. It will be important that structural reforms accompany macroeconomic policites to achieve these goals".

*Disclaimer: charts and data are presented as I receive/see them. Sources are usually not checked for validation and my own calculations are of 'back of the envelope'-type. I am aware that some math that I do myself might be wrong and/or misleading to some extent. In financial markets the rate of change of economic data is often more important than the actual level and the perception of 'what is priced in' is more important than 'what is actually going to happen'. This is actually the way people pick entry and exit points. So... yes, sometimes you might say 'This guy is an idiot, this is way wrong!' with a high conviction, being right. Not to worry. Markets are made of expectations and the clash of conviction between its participants. Portfolio managers know that being an idiot is sometimes profitable and being smart is often a bad choice. It is all reality, sometimes good, sometimes bad. By the way: corrections to my analysis and intelligent debate is welcome. theintriguedtrader AT gmail do com

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