Reuters paraphrases Angel Merkel today as having said that 'the vulnerability of the euro has not yet been lastingly overcome and the currency is being shielded at the moment by the euro zone's safety net.' Relatedly, the German chambers of industry and commerce said today that if the Euro rises to $1.50 that the German economy will come under pressure.
This is a not so subtle demand for the US to cease devaluation plans.
Sarkozy is calling for currency manipuliaton to be on the docket at the G20.
Brazil is boycotting the events and has been forced recently to play vigorous defense to offset the impacts of USD moves on the Real.
The Yen is flying.
Those believing the Fed will still announce a full QE2 effort on November 3rd may be mistaken.
For the Fed to turn around only two weeks after the G20 and in defiance of an almost global insistence on stopping the dollar slide, I can't imagine we move forward with massive monetary stimulus. I'm not ruling out the possibility for a morsel of monetary stimulus to be announced, but even voting Fed governors (Dallas Fed's Fisher for ex) are starting to suggest they have questions about both the efficacy of another round of monetary stimulus and also the Fed's ability to implement it without taking extraordinary risks (hyperinflation, currency wars, increased protectionism, destroying purchasing power of American consumer who could be bogged down by high food and fuel costs, etc).
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