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6 Feb 2013
Forex Flash: Euro upside eases this week as unease grows – BTMU
Lee Hardman, FX analyst at the Bank of Tokyo Mitsubishi UFJ notes that Euro upward momentum has eased early this week although its recent strengthening trend is prompting increasing unease amongst European policymakers.
French President Hollande became the most high profile political figure to date to speak out about the building dangers to the Eurozone economy from a strengthening Euro. More specifically he put forward the idea of adopting an exchange rate policy for the Eurozone so that it is not subjected to an exchange rate that does not reflect the real state of the economy.
Hardman notes that this plays to concerns that the Eurozone could become a victim in a global currency war lacking a defence. The clash in ideology between Germany and France over exchange rate policy is being exacerbated by the diverging performance of the French and German economies which according to the PMI surveys is at its widest on record. Hardman finishes by commenting that “It is likely that France will continue to suffer a stronger than ideal exchange rate unless the ECB eases further. However given that the trade-weighted Euro has only risen by around 3.3% since their last meeting we doubt the ECB will be overly concerned yet by the Euro.”
French President Hollande became the most high profile political figure to date to speak out about the building dangers to the Eurozone economy from a strengthening Euro. More specifically he put forward the idea of adopting an exchange rate policy for the Eurozone so that it is not subjected to an exchange rate that does not reflect the real state of the economy.
Hardman notes that this plays to concerns that the Eurozone could become a victim in a global currency war lacking a defence. The clash in ideology between Germany and France over exchange rate policy is being exacerbated by the diverging performance of the French and German economies which according to the PMI surveys is at its widest on record. Hardman finishes by commenting that “It is likely that France will continue to suffer a stronger than ideal exchange rate unless the ECB eases further. However given that the trade-weighted Euro has only risen by around 3.3% since their last meeting we doubt the ECB will be overly concerned yet by the Euro.”