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1/28/2013

Given the EU’s delayed response to the global currency devaluation for growth trend, we suggest that they should start following the Market Doctor.

Well over a month ago, the Market Doctor team highlighted the then recent trend of some major economies adopting a policy of not being so concerned over a weakening currency, where the weakness in the US$ and much more obvious Japanese Yen, has been greeted with positive gains in their corresponding Equity markets as exports hopes are rising.  The one major economic zone that wasn’t quite getting the big picture was the EUROZone, whose currency has been appreciating visa vie the Greenback and to a much larger extend the Yen.  Finally about a week ago, EU officials began sounding the alarm regarding the Japanese policy as the quickly depreciating Yen has been making Japanese exports more and more attractive, especially verses the EURO Zone. Hey EU…this is not rocket science…all you have to do is read the Market Doctor !

So how much more can the once mighty Yen, which just broke through 90 verses the Greenback this past weekend, depreciate?  Well, the argument could be made that it has been grossly overvalued for about a decade given the sputtering Japanese economy.  When the Doc started his career trading, the Yen was about 250 per USD…so 90 aint nutin (that’s PhD jargon).  Gitty up global currency markets !!

 

Stephan Kudyba (MBA, PhD)                      THE MARKET DOCTOR

 

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