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The G7 meets. Don't hold your breath

| Posted by: Paul Donovan | Tags: Paul Donovan

  • The G7 finance ministers meet in Japan. Financed by their employers. There may be a mention of the UK referendum, an expression of the view that growth is good, but it seems unrealistic to expect anything more substantial to come out.
  • There has been idle speculation of a coordinated fiscal response from the G7, but this can only be idle speculation. The G7 finance ministers have widely differing powers, and widely differing abilities to effect policy change. Coordination of ambition is all that can be achieved.
  • The dollar has softened a little after the post-FOMC minutes induced strength. The economics of foreign exchange markets have undergone some significant shifts, and looking to interest rates alone to drive currencies seems unrealistic.
  • German producer price inflation was negative again (perhaps a better reflection of corporate pricing power than consumer price inflation). Department store sales in Japan were negative. The US offers us housing data today.