What Globalization is All about:
It's about the capurting of new, emerging markets and the country with the cheapest currency (i.e. highest level of exports) has the clear advantage.
Right now there's economic warfare being fought between the US/EZ (Euro Zone) and it's Asian trading partners China/Japan. This week's battle is at the G-20 meetings. It's all about getting the currencies more in balance.
China is very unlikely to freely float it's currency any time soon for a number of reasons, the most important being that they view the Japanese collapse of the 80's and mid 90's as being due to the U.S. causing the Yen to appreciate. You know what? They're absolutely right about that. In addition to how badly their exports might get hurt, their banking system is in a very vunerable position. If their exports decrease and business drys up a bit, there's gonna be a lot of bad loans. The chinese banking system isn't set up to properly offset the losses that would accrue if their currency rapidly appreciates. That's one reason why ur gonna see more and American investment and financial expertise being "exported" to China.
On the other hand, it's vital that the Chinese market (and all emerging markets) for American goods continues to grow. The consumption part of our economy is gonna shrink due to the aging of the baby boomers-there's just less people in the 18-45 demographic and that means less demand for everything from cars, houses etc.
How does trading currency look? Well the USD, EURO and GBP face similar economic situations. There's less of a need for interest rate hikes at the moment for the US and Eurozone (although Trichet is doing his usual jumping up and down and barking trick) and more need for the currencies to devalue relative to the Asian currencies. Of the 3, the GBP is the one that really needs a rate rise. The EUR/JPY and GBP/JPY pairs are trading at the highest levels seen since around March of 1998. They definately want to see their currencies come off these levels, but the GBP figures to be strong so that won't happen there yet. EUR/JPY is probably topping out, or is close to it. Futures suggest this. The USD/JPY is at nearly the same level now as it was since October of 1998. Something to look at there.
http://bloomberg.com/apps/news?pid=2...&refer=economy
http://bloomberg.com/apps/news?pid=2...&refer=economy
With the short US week, there's a lack of news reports, but Monday's Leading Indicator could be good. BB is predicting a rise so we'll see what happens.
It's about the capurting of new, emerging markets and the country with the cheapest currency (i.e. highest level of exports) has the clear advantage.
Right now there's economic warfare being fought between the US/EZ (Euro Zone) and it's Asian trading partners China/Japan. This week's battle is at the G-20 meetings. It's all about getting the currencies more in balance.
China is very unlikely to freely float it's currency any time soon for a number of reasons, the most important being that they view the Japanese collapse of the 80's and mid 90's as being due to the U.S. causing the Yen to appreciate. You know what? They're absolutely right about that. In addition to how badly their exports might get hurt, their banking system is in a very vunerable position. If their exports decrease and business drys up a bit, there's gonna be a lot of bad loans. The chinese banking system isn't set up to properly offset the losses that would accrue if their currency rapidly appreciates. That's one reason why ur gonna see more and American investment and financial expertise being "exported" to China.
On the other hand, it's vital that the Chinese market (and all emerging markets) for American goods continues to grow. The consumption part of our economy is gonna shrink due to the aging of the baby boomers-there's just less people in the 18-45 demographic and that means less demand for everything from cars, houses etc.
How does trading currency look? Well the USD, EURO and GBP face similar economic situations. There's less of a need for interest rate hikes at the moment for the US and Eurozone (although Trichet is doing his usual jumping up and down and barking trick) and more need for the currencies to devalue relative to the Asian currencies. Of the 3, the GBP is the one that really needs a rate rise. The EUR/JPY and GBP/JPY pairs are trading at the highest levels seen since around March of 1998. They definately want to see their currencies come off these levels, but the GBP figures to be strong so that won't happen there yet. EUR/JPY is probably topping out, or is close to it. Futures suggest this. The USD/JPY is at nearly the same level now as it was since October of 1998. Something to look at there.
http://bloomberg.com/apps/news?pid=2...&refer=economy
http://bloomberg.com/apps/news?pid=2...&refer=economy
With the short US week, there's a lack of news reports, but Monday's Leading Indicator could be good. BB is predicting a rise so we'll see what happens.