Currencies  |  April 05, 2013 13:34:28

Friedman: Eurozone will distribute

U.S. stocks skorigovali recent losses

Equity markets in the U.S. yesterday spamätali decent strongest growth from sale last month, which came on Wednesday after a weaker sample data ADP employment and ISM nevýrobného sector. Trafficking but was not too convincing and weakest due to a weekly applications for unemployment benefits from November. Yesterday are most successful at the Finance sector and due to the improvement of the situation in the euro zone, when markets slow zabúdajú to Cyprus and Italian politics was slowly starting to improve due to the initiative of ten wise men. Yester cocktail stock: Dow Jones +0.38% SP500 +0.40%, Nasdaq Composite +0.20%.

Soros warns Japanese Lavin

Putao market attention is still mainly the Bank of Japan BoJ and due to his decision to double the monthly total purchase of assets from the market and also purchased and extending maturity bonds. BoJ on the market so that the new governor has slowly ceased to trust Kuroda went up najťažšieho caliber weapon. The result was to weaken the yen by nearly 4% against a green dollar bill and the weakest level since 2009. With such aggressive steps of the will but also appeared concerned that the central bank is too-not palter with Confidence market. The fact that over Veca BoJ can quickly lose control, said yesterday known investor George Soros: This is what Japan is doing is quite dangerous, because they are doing it for 25 years by increasing the deficit and without it, the economy began to improve. So if these steps will start something big, it might not be able to stop.If only begins mugging, many people realize that this process will continue, and investors will begin to move their resources to foreign countries and the fall can become a snowball.

Given the problematic demographics and other structural problems of the economy is best for the BoJ to generate inflation through a weakening yen, no situation may then quickly lock out of control. Because its currency to weaken through intervention is easier than strengthen it. Many countries failed in the process of protecting their currencies against him depreciácii because it is necessary foreign exchange reserves, which can be quickly spend. While we do not see room for it to the weakening of the yen has become such an avalanche, and we see no bargain shares and also to dlhopisoch, it will have been a big problem BoJ to maintain confidence in its policies.

Draghi suggested the reduction of rates

Who BoJ is trying to weaken its currency, the ECB is trying to confirm the markets that the euro will be here forever and needless fear the collapse of the euro zone or that cyperské troubleshoot the template with the banks and for other countries. Monetary market finally persuaded Draghi and the euro, after contact with tohtoročnými low peaks reflected sharply upward. While the majority of analysts perceived as dovish comments Draghi and the sensed signals of them growing probability of a reduction in interest rates, no monetary traders probably see it as a message that the ECB tries to deal with the situation on the periphery. In our opinion were months Draghi comments for euro negative, no market yesterday decided otherwise and the euro grew up above the level of 1.29.

Friedman: Eurozone will distribute

The fact that the euro area will have difficulty overcoming their initial crisis, already in 1997, said Milton Friedman. It was then pointed out that in the absence of monetary channel, will have shocks in the competitiveness of removing not one value exchange rate, but the changes of thousands of working arrangements or migration of the labor force. He then Friedman pointed out that this adjustment can lead to problems: The reason for the creation of the euro was mainly politics, not economics. The aim was to unite Germany and France so closely that there will be further war in Europe became impossible. But I think that the adoption of the euro will have the opposite effect. Will worsen political tensions converting various shocks, which would be readily avoidable by adjusting exchange rates, the political problems that will distribute the euro area. Political unity can create a path for monetary union.Monetary union, established under adverse conditions, but it will be a barrier to achieving political union.

View on today

Today we look at the U.S. data mainly from the labor market for March. On Wednesday ADP Marco finished below expectations and were weaker yesterday behold weekly applications for unemployment benefits. The stock market has probably counted against the weaker data, and you see its a decent drop. Nasdaq 100 index is slowly moving closer to the bottom of the growing wedge formations Levels, whom SP500 index has lesser ground level of the pattern broke. Weaker macro data from the U.S. would thus could trigger stronger market decline.

Author:Jan Benaki | TRIM Broker, as | Trading on exchanges TRIM Broker

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