Bernard Hickey details the key news overnight in 90 seconds at 9 am in association with Bank of New Zealand, including news the New Zealand dollar rose over 75 USc overnight as the US dollar continued to weaken on talk the US Federal Reserve is about to print a lot more US dollars.
The Chicago Federal Reserve President Charles Evans told the WSJ yesterday the US needed much more stimulus to get going again. This helped drag the US dollar down against most currencies, except for the British Pound, where there is new talk Britain will also print more money to try to get its economy going again.
The gold price jumped again to a fresh record high of US$1,351/oz as investors fled those Fiat currencies seen as vulnerable to devaluation. It is on its longest rally since 1920.
Safe haven buying by many investors and banks saw the yields on the 2 year Treasury bond drop to 0.38% and the yield on the 10 year Treasury bond drop to 2.3%. Many expect the Federal Reserve to buy these bonds in an attempt to lower long term interest rates.
The tension is rising in these currency wars as fears grow that developed economies laden with debt will try to print their way to freedom through a series of competitive devaluations, but this leaves the developing world struggling with more highly valued currencies that could hammer their export sectors.
New Zealand faces the same pressures, given its economy is very weak but its currency is still pressing towards 10 month highs.
Meanwhile, the IMF has warned against a slide into currency wars and has cut its forecasts for global economic growth. Tension is ratcheting up ahead of a meeting this weekend of officials and ministers from the G20, World Bank and IMF in Washington. US Treasury Secretary Tim Geithner warned of a 'damaging dynamic' in developing economies who are holding their currencies down to boost their export sectors.
The meeting is shaping up as a clash between America, which is laden with debt and trying to get its economy going, and China, which wants to keep its currency low to keep its export sector growing.
There are calls for a fresh restructuring of the global currency system in some sort of new Bretton Woods or Plaza Accord.
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