Don961: Pimco: The US will win the Cold War for currencies

22 July 2019 02:37 PM

Mubasher: Pimco Investments believes that the United States is likely to emerge as a winner in the Cold War of currencies

“If there is a winner in this cold war of currencies, it will be the United States,” said Joachim Veils, a global economic adviser to the company, in comments with the US network CNBC
He attributed his vision to the fact that the US dollar is highly likely to be weaker than the increase from current level

By 1036 GMT, the dollar’s main index, which tracks the performance of the US dollar against six major currencies, has stabilized at 97.163, up 1.06 percent since the beginning of this year

The cold war on the currency front refers to a conflict that is not about direct central bank intervention in foreign exchange markets, but by reducing interest rates and negative interest rates (such as those in Europe and Japan), quantitative easing and control of the yield curve.

In the case of the United States, the President’s comments were also a factor in the matter
He noted that in early 2017, shortly after his election, US President Donald Trump spoke to Treasury Secretary Stephen Menuchin about the need for a weak dollar and subsequently ended the entire Green Paper

“It is likely that the US administration has the power in this currency war

The cold war of currencies is on the rise, he said, noting that the Fed and Bank of Japan are likely to cut interest rates soon

“It is clear that we are returning to a situation where everyone wants a weaker currency, and neither one nor any central bank really wants a stronger currency, which is why it is a cold war for currencies,” he said

He asked whether the Fed would cut interest rates by 25 basis points at the July meeting and another 25 basis points at the September meeting or whether the 50-basis-point cut should be implemented once

“I think there is a chance (50 to 50) at least that US policy makers have decided to take a slightly more decisive stance

Investors had drastically reduced their expectations for a 50 basis point rate cut at the next meeting after reports that the cut would be 25 basis points     link

Noneb4him:  ENDED?  Entire GREEN PAPER???   Translation issues or clue?   Past tense, ended… or in process… ending??  hmm… Seems to be a clue to me.  Also the green paper,imo, is the dollar.  And ending it would mean what?  Stopping the fiat system??   Interesting read.  Thanks for the articles and clues.