Follow The Money, Not Central Bankers Or Politicians
Eric De Groot | Feb 19, 2017 01:44AM ET
The euro, controlled by the invisible hand and not central banks or politicians, is headed lower. While central bankers may attempt to hold it steady through the French Presidential election from April to May, they will certain fail to reverse the trend and possibly fail at holding the line.
Politicians make headlines because they're worried about trade. The invisible hand, completely ignored by headlines, is worried about the financial system that backs the euro during a debt crisis. The latter is the driving force behind the distribution and accumulation in the euro and U.S. dollar, respectively, (see chart). This 'safe haven' capital flow from Europe to the United States is driving up stock prices against the expectations of a majority focused solely on domestic interpretations .
Headline: Merkel suggests euro is too low for Germany
German Chancellor Angela Merkel suggested on Saturday that the euro was too low for Germany but made clear that Berlin had no power to address this "problem" because monetary policy was set by the independent European Central Bank. Merkel made her remarks at the Munich Security Conference as U.S. Vice President Mike Pence looked on. They seemed aimed at addressing recent criticism from a top trade adviser to President Donald Trump, who has accused Germany of profiting from a "grossly undervalued" euro.
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