Business News February 10th
Xiang Zhuang sword intended to Pei Gong.And at the same time, the Trump team recently announced the "Euro manipulated" that apparently another attempt.
The euro zone is facing a double attack in the core of a new round of election in an emergency and the Greek crisis, and Trump recognized the United States ambassador to the EU candidate Malloch, has said that the best from Europe. He even said, "the euro will not hold 18 months will collapse."
This is not a senior official in the Trump team for the first time on the exchange rate of euro and the high trade surplus against Germany, Trump early in 2012 that Greece should take off in Europe, and was elected president of the United States told the media that "the EU is Germany's tool", its team also claimed that "the German euro zone into Germany's trade" during the presidential election.
But industry experts as German finance minister Schauble and many accept the first financial reporter pointed out, making the exchange rate of the euro is the European Central Bank rather than Germany, taking into account the inflationary pressure, Germany itself does not want to see the weakness of the euro.
Obviously, Trump and his team of "ulterior motives". Since Trump was elected president of the United States, the parties are worried that he will set off a new round of trade war, and to trade in German manufacturing "trouble" is one of the necessary means. From Mexico, Japan and the euro zone, "Trump" has been a trade war started.
Robeco chief economist Kenailisen on the first financial reporter said, "trade protectionism and isolationism Trump economics" will bring the U.S. trade relations with other countries is rigid, not conducive to global economic development.
Trone Bullock see the disintegration of the EU
It pours, the core of the euro zone and put out an emergency will face another crisis in Greece, Germany again ruled out the cut Greece's debt. According to the International Monetary Fund (IMF) estimates before, unless a major restructuring of Greek debt, 2060 Greek debt will reach its GDP (GDP 275%.)
The euro zone woes, it is a good opportunity for the Trump team started the "offensive". Malloch revealed in an interview, Trump is not the fans, and encourage other eurozone countries to learn as soon as possible to hold a referendum on Britain, from Europe, to 2017 to become the EU's disintegration.
Malloch also accused Germany of manipulating its currency to gain a competitive advantage, and led to low prices for U.S. products, a large number of products into the U.S. market, extremely unfavorable to the United states".
Obviously, the Trump team did not much care in Germany, the competitiveness of products, but the German surplus due to the weaker euro. The newly established Trump president of the National Trade Commission Peter Navarro recently told the media that the euro is like a "hidden Mark of Germany, the low value of the German relative to major trading partners has the advantage.
German Prime Minister Merkel responded immediately, Germany will not manipulate the euro exchange rate, the euro exchange rate belongs to the European Central Bank's terms of reference, Germany has been supporting the independence of the ECB, and will not change this position.
In that the most senior finance minister Schaeuble in February 5th as the world's world competitiveness relative to Germany, the euro exchange rate is too low, but this is caused by the ECB's expansionary monetary policy, the policy also pushed up the German trade surplus.
"In the European Central Bank President Delagi began to develop an expansionary monetary policy, I told him, this will push the German trade surplus." Schaeuble said that Germany could not make the exchange rate policy implication, and Americans are obviously wrong, the exchange rate should go to Delagi.
In February 7th, Mr Delagi Dze responded: "first of all, we are not currency manipulators. Second, our monetary policy reflects the diversification of the eurozone and the US economy".
In fact, the German Ministry of finance has been quantified on the European Central Bank easing monetary and financial institutions have no opinion. The official forum (OMFIF) CEO Malsch pointed out that if Germany in the monetary union, the euro value will be lower than the German currency should be with some value.
Morgan Stanley a chart recently confirmed that the purchasing power parity (PPP) basis for Germany, the euro is underestimated by more than 40%, but in many European peripheral countries, the euro is still very expensive. Therefore, it can be obtained in Germany from a weak euro competitive benefit is wrong. The OECD (OECD the data also show that) to measure the competitiveness of real unit labor costs, Germany's competitiveness since 2010 almost no change, and the competitiveness of the United States is reduced by 20%.
Weak euro will continue
Trump's tough pressure on the euro zone, would make the euro rebound? Obviously power market fundamentals than "cheap", always don't even say Europe is the world's best foreign exchange market liquidity. The first financial reporter interviewed a number of traders found on the fundamentals, the fate of the euro in 2017 might be vulnerable.
In the economic disparity between the strength of the euro zone currency is unified, which spawned a contradiction of Economics -- the exchange rate generally reflect the economic fundamentals of a country, the exchange rate is decided by a country's labor productivity, because of the country's economic strength and appreciation, and vice versa. By this logic, Germany France, the currency exchange rate should be significantly higher than that of Greece, Germany and France would otherwise enjoy a weak currency caused by export advantage. However, the industry generally believe that the United States "currency manipulation allegations" unfounded.
In Delagi's view, the EU monetary policy reflects the different conditions of the euro area and the United States economic cycle continued to take competitive currency devaluation, the EU single market will not survive.
The differentiation of monetary policy, the United States began to gradually withdraw quantitative easing in October 2014 (QE), and in December 2015 officially started to raise interest rates; however, the euro zone QE trillion plan from March 2015 started.2016 in March, the European Central Bank will be more QE asset purchases from 60 billion euros per month to 80 billion euros. In December of the same year, the European Central Bank announced the extension of the QE will expire on March 2017, and from April to December the monthly purchase of 60 billion euros in assets.
Many traders to the first financial reporters, on the current market situation, the overall trend of the euro 2017 is downward. With Germany, France and Holland and other European countries elections, political risk has become an important thrust market pricing.
"Based on these risks, the euro has become the most recent performance of the most weak currency, the euro against the U.S. dollar parity has surfaced again," said Fu Fu, head of China's foreign exchange market analyst, told reporters.
Delagi Ben Zhou reiterated, in 2019 will continue to implement the QE, which means that the economic growth in the euro area is extremely unbalanced situation, the future for a long time the central bank will maintain an accommodative policy stance, is based on the depreciation of the euro, especially on the interest rate cycle has started with the dollar.
Why keep a close eye on Germany?
Since it can not shake the euro exchange rate, why Trump staring at Germany and the euro zone?
In fact, the Trump team during the presidential election has been eyeing in Germany. By U.S. Commerce Secretary nominee Ross (Wilbur Ross) and Navarro co authored the campaign economic plan in the white paper clearly pointed out: "half of the overall U.S. trade deficit from six countries: Canada, China, Germany, Japan, Mexico and South Korea".
The white paper said: "if you look at the bilateral relations between the United States and the countries such as the United States, some hard but smart negotiations can improve our trade balance through some combination of increased exports and reduce imports, and the negotiation is obviously Trump is good at it".
Trump's economic team believes that the United States to achieve GDP growth is an important way to manage the huge U.S. trade deficit, the means include tariffs, trade measures to strengthen law enforcement and exchange rates and so on.
In dealing with Canada and Mexico, Trump said to talk about "the North American Free Trade Agreement"; for South Korea, Trump criticized the Korea us free trade agreement that the U.S. auto industry jobs; for Japan, Trump accused the manipulation of exchange rate, Japanese car companies TOYOTA factories in the United States, or on the Mexico factory production car exports to the United States with heavy taxes, Japanese Prime Minister Abe Shinzo is expected to be 10, arrived in the United States to Trump personally petition.
"Europe is not far away from the pressure." Kenailisen on the first financial reporter said.
According to the German IFO Economic Institute, Germany in 2016 the world's largest return trade surplus economies, the trade surplus hit a record high, reaching $297 billion, and the United States in the 2016 trade deficit of $478 billion. In 2015, Germany since 2010 has been the first major global trade surplus economies, which naturally by focusing on the Trump team.
The United States strategic think tank Stratfor is predicted in the latest issue of the United States on the midpoint broken deep consideration: Although Trump can shout a trade war on Germany, but in the framework of international trade law, which can display space is limited, and Trump for the euro's attack may be extended to the whole euro Zone attack and, due to regional trade protectionism and the resurgence of populism, this is true that German anxiety. But in order to avoid becoming America's next punitive trade measures, "Germany will take measures to defend its huge trade surplus.
Malsch pointed out that the United States accused Germany will encourage other countries accused of German selfishness, which will continue to divide Europe, hinder the continent to find constructive solutions.
However, as pointed out by the Kenai Li Sen, the deterioration of trade relations on global economic growth is not a good sign, and may make us growth prospects is hurt, and push up inflation. At the same time, the strong dollar will make trade deficit become huge, and this fact will lead to protectionist measures or more. "Kenailisen said.