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Wary of a strong yuan, China has reason to rue yen and euro weakness

The renminbi might be in for a further period of broad strength but that will be driven as much by the unattractiveness of other currencies as by any inherent allure. Other currencies – though perhaps not the US dollar – just don’t look that appealing.Given Washington’s preoccupation with the US dollar/yuan exchange rate, realpolitik may dictate that a settlement of the US-China trade war will incorporate some subsequent renminbi appreciation versus the greenback. But if that was accompanied by… Source link

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European Central Bank makes moves to boost struggling euro zone after growth forecast slashed

Europe’s central bank delivered a fresh round of monetary stimulus in a bid to shore up the weakening economy as it cut its growth forecast by the most since the advent of its quantitative-easing programme.European Central Bank (ECB) president Mario Draghi said the euro-zone economy will now expand only 1.1 per cent this year, a drop of 0.6 percentage point from forecasts just three months ago. A package of help from new loans for banks to a longer pledge on record-low rates is intended to… Source link

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Brexit apart, Spain’s political uncertainty is a microcosm of the euro zone’s deepening troubles

Political parties in Spain will enter campaign mode this week after Prime Minister Pedro Sánchez on Friday called for an early general election, the third such ballot in as many years. However, far from being an exception, the latest political uncertainty in the euro zone’s fourth-largest economy comes as there are mounting signs of political instability and stagnating growth in other large European economies like Germany, France and Italy. With the euro zone “celebrating” its 20th anniversary… Source link

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How the euro could become collateral damage in the US-China trade war as the yuan comes into focus

A slower pace of economic expansion in China is one of the drivers of dimmer prospects for the euro-zone economy. Not China’s problem? Maybe not, but if the euro comes under sustained pressure in the currency markets, it will complicate Beijing’s efforts to keep the yuan stable.  With China already embroiled in trade negotiations with the United States that include discussions about the value of the yuan, Beijing might rationally conclude some degree of yuan strength will be needed to assuage US concerns. If so, an accompanying appreciation of the…

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How China’s yuan can gain ground against the US dollar and the euro as a global reserve currency of choice

Everyone wants to knock the US dollar off its throne as the world’s leading currency. Europe has tried and failed, with the euro’s hope for global forex glory badly dented by the European debt crisis. Beijing would love to see the yuan leapfrog into pole position but it is losing the hearts and minds campaign to win over markets and build confidence in the yuan as a credible dollar alternative. Beijing has its work cut out if it is going to steal the dollar’s crown before the 21st century is…

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Why the euro zone is a bigger worry than China’s economic slowdown

For a snapshot of financial market anxiety about a global economic slowdown, look no further than the performance of the Dax, Germany’s benchmark stock market index, on Tuesday. In early morning trading, the gauge shot up in response to Beijing’s pledge of deeper tax cuts as part of its efforts to stimulate China’s economy. As exports account for more than 47 per cent of Germany’s gross domestic product, a recovery in China – Germany’s biggest trading partner outside the euro zone – is crucial to the country’s economic prospects. But…

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The euro area can protect its growth from trade problems

If, as seems likely, the sanctions dispute with the U.S. were to escalate, those would be the countries with the most to lose because alternative markets for $300 billion of their export sales might not be readily available. Still, it is important to keep those events in the proper perspective. At the moment, the euro area economy is doing well. The current growth dynamics are keeping demand and output moving forward at twice the speed of the system’s estimated potential and noninflationary growth. Apart from that, the fiscal and monetary…

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