Many in the market may have thought that the race to the bottom was over, but Helicopter Ben set us straight again overnight; keep spending and keep rates low to maintain a liquid economy. This will force a weaker USD which will force the US to import less and create more at home plus the added benefit of devaluing an out-of-control debt mountain. A virtuous cycle if you like, certainly as far as the US is concerned. Wall Street may not be happy in the long run, but they’ve had it good for a long time.
The BOJ and SNB want weaker currencies, the EUR is a basket case, the USD wants to join in the race to the bottom and the GBP has serious problems of its own. Little wonder that the ‘small’ currencies like AUD, NZD and CAD are tracking higher. I’ll bet the Chinese are taking a few minutes out from their New Year celebrations to put a few bids in the Gold market!
Good luck today and Happy Australia day.
