Ifo Data Stronger than Expected

The latest Ifo survey released earlier today showed only a slight dip in German business expectations. The index dropped from its 15-year high 105.9 in April to 105.6 in May, much better than most had expected. While the Ifo may slip more in the coming months, a sharp dropoff is unlikely, as most believe the German economy should gain momentum later in the year. Forbes reports:

‘The smaller than expected drop in the index will help the euro to sustain its gains and will do little to dissuade many in the market who look for the ECB to hike by 50 basis points next month,’ said Mitul Kotecha.

Read more: Euro remains firm after strong Ifo data; market awaits US data

Senators Criticize Snow for Letting China off the Hook

Last week, the Treasury Department released its semi-annual report on exchange rates. The report stopped short of accusing China of being a “currency manipulator”. Now, Secretary John Snow is under fire from Congress. Finding China’s currency to be intentionally overvalued against the USD most likely would have triggered talks between the US and China and possibly led to economic sanctions. By not making such a claim, the Treasury has invited criticism from Sens. Charles Schumer and Lindsey Graham, who are

Canadian Dollar may be overvalued

In the last month, the Canadian Dollar has soared to unbelievable heights, reaching a 28-year high against its neighbor to the South, the USD. Most economists, however, believe the Canadian Dollar is overvalued. In a recent Press Conference, the President of Canada’s Central Bank insisted the Canadian Dollar’s recent run was mostly a product of speculation and does not reflect economic fundamentals. Further, many analysts expect the currency to retreat 5-10% against the USD in the coming months. Reuters reports:

“Although (U.S. dollar versus Canada) has reached a new 28-year low of 91.12 U.S. cents, the daily technical studies have been lingering at oversold extremes.”

Read More: Canada, U.S. dollars not headed to parity

US: China not a currency manipulator

The eagerly awaited semi-annual Treasury report on exchange rates has finally been released, and the results may have serious implications. Many members of Congress, among others, had been hoping the US would use the report to officially label China a currency manipulator, which would justify the use of trade sanctions and other economic penalties. Instead, while admitting it was concerned about widening economic balances engendered by China’s artificially low exchange rate, the Treasury Department stopped short of formally

Congress wants Yuan revaluation in 2006

Earlier this year, US Senators Charles Schumer and Lindsey Graham proposed a bill that would slap a 27.5% tariff on all Chinese imports, in the event that China failed to revalue the Yuan in a timely manner. After meeting with senior Chinese banking officials, however, the Senators agreed to postpone voting on the

China hikes interest rates

China caught investors by surprise last week, when it raised its benchmark interest rate for the first time in years, to 5.85%. Foreign banks applauded the move as emblematic of China’s broader effort to allow market forces to play a larger role in the economy. China must tread carefully, however, as the Yuan-USD peg severely constrains its ability to conduct monetary policy. If China’s Central Bank wishes to raise rates