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Strategies & Market Trends : Currencies and the Global Capital Markets

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To: Henry Volquardsen who wrote (2190)	10/18/1999 3:12:00 PM
From: Hawkmoon	Read Replies (1) of 3536

Strong US demand is a central component in their own recovery hopes, particularly in Asia. Agreed... with one caveat. I believe the Europeans were growing quite concerned about the weakness of the Euro and feared that it might actually fall below par value with the dollar, psychologically signalling political and economic failure. So in the short-term, they may be sacrificing some economic growth in order to maintain the viability and perceived "attractiveness" of the Euro as a currency and political unifier. As for the Japanese, my feeling is that being caught in the liquidity trap they have created, they have no recourse but to massively print Yen to impose inflation on their economy, potentially resulting in a 50% depreciation in the Yen to dollar ratio. I believe they preferred to do that from a position of strength, namely 100-105 yen to the dollar rather than from a weak yen valued at 140-160 as it was last year. What do you think of my pet theories? Regards, Ron

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