The US Treasury Department put China, Japan, Germany, Taiwan, and South Korea on a currency “Monitoring List,” last Friday.
“China, Japan, Germany, and Korea are identified as a result of a material current account surplus combined with a significant bilateral trade surplus with the United States. Taiwan is identified as a result of its material current account surplus and its persistent, one-sided intervention in foreign exchange markets,” the Treasury wrote in its semi-annual FX report to Congress.
And it “will closely monitor and assess the economic trends and foreign exchange policies of these economies.”
Specifically, the Treasury noted that it’s concerned about the rising imbalances with a number of its major trading partners, and how that could impact the global economy.
As for the rest of the world, here’s the scoreboard as of 8:10 a.m. ET:
- The Japanese yen hit its strongest level in 18-months, after surging by approximately 5% at the end of last week when the Bank of Japan unexpectedly did not boost stimulus. The yen strengthened by about 0.3% to 106.14 per dollar earlier in the day, but is now around 106.59 per dollar.
- The euro is stronger by 0.2% at 1.1482 after Eurozone PMI came in at 51.7, above expectations of 51.5. Readings from both France and Germany disappointed while Italy’s beat.
- The Australian dollar is stronger by 0.5% at .7638 ahead of the Reserve Bank of Australia’s Tuesday meeting. “RBA now has a dilemma. Economic growth doesn’t argue for a rate cut next week. But the breadth of the price weakness in the Q1 CPI and signs that inflation expectations are shifting down suggest the period that inflation will undershoot the 2%-3% target could be more persistent than temporary,” noted a Citi Research team led by Paul Brennan. “These considerations provide justification for a 25bp easing next week.”
- The dollar index is weaker by 0.2% at 92.88. Notably, Puerto Rican Gov. Alejandro Garcia Padilla said the island’s Government Development Bank would not make a $422 million payment due on Monday. Monday’s default will put pressure on Congress to find a resolution for Puerto Rico, which owes “another $1.9 billion of debt on July 1, including about $777 million in general obligation debt backed by its constitution,” according to Reuters.
- And, for what it’s worth, Bitcoin is down 1.4% to 440.52 versus the dollar after Australian IT executive Craig Steven Wright claimed that he is the creator of the virtual currency.
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