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Manipulation? Surely not

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  • The US Treasury decided that no one is manipulating their currencies, though in a triumph of politics over economics the Chinese currency is still significantly undervalued in their view. There were also some rather pointed comments about movements in the Japanese yen.
  • Last week the Euro area saw the size of the Cypriot problem increase, the Cypriot central bank board fall to two members (the rest all resigned), and Portugal and Ireland get seven more years to repay their respective bailouts.
  • German finance minister Schaueble has suggested that a genuine banking union in the Euro area would require treaty change, as the existing institutions are not up to the job. In a broad way that is largely the British argument in favour of reform (though not banking union specific).
  • The week starts with a relatively quiet data calendar. The US Federal Reserve Beige Book on Wednesday is of some note, as there are those in the markets who have been worried about a summer lull hitting the economy. We see the recovery continuing, albeit slowly.

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