RMB Need Not Be Pegged To The US Dollar &Nbsp; &Nbsp; Appreciation Need Not Be Too Urgent.

Last week, the Fed said in the minutes of the conference on interest rates, as the core is now.

The market was very sensitive to the news. Then, the US bond market lifted, the US dollar fell across the board, and the US dollar index fell below 80.

When the dollar strengthened, the author pointed out in the column that the US dollar will not continue to strengthen in the short term. The three most important reason why the US Federal Reserve will start quantitative easing again is the reason why it does not support a strong dollar.

The other two reason is the expansion of the US trade deficit and the two quarter economic downturn.

Looking forward to the future, I believe that the US dollar will continue to weaken, but the depreciation space is also limited. The reasons are as follows:

A weaker dollar will help restore the US economy.

In August, the United States did not include other durable goods orders for pport equipment, an increase of 2%, which was higher than the expected level of 1%. However, it was dragged down by the sharp reduction in aircraft and automobile orders, and the pport equipment orders decreased by 1.3% after seasonally adjusted.

Orders for core capital goods rose by 4.1% (5.3% in July), while core capital goods exports increased by 1.6% (up 0.1% in July).

Since the three quarter, seasonally adjusted core capital goods orders have increased by 2.1% in the quarter to ring ratio (two quarter to 30.8% in the two quarter).

In July and August, core capital goods shipments (enterprise equipment consumption substitution index) increased by 10.3% over the second quarter, and contributed to GDP.

At the same time, some optimistic data are also supporting the global soft landing.

In September, the IFO business climate index in Germany rose to 106.8, the highest level since June 2007.

For some time, optimism about the European economy will gradually fade, because the three or four quarter of Europe's economic growth will be significantly lower than the two quarter.

The recent unfavorable macroeconomic news in Europe: first, the leading macroeconomic index has turned negative.

In September, the euro zone PMI index fell 1.5 points to 53.6.

The German PMI index fell 2.9 points to 55.3, while the French PMI index rose slightly to 55.4. The two largest economies in Germany and France are still the locomotive of Europe, but the upward trend has weakened.

Two is the decline in orders in the euro area.

In July, the euro area's orders fell by 2.4%, roughly the same as that in June.

Three, Ireland, which had revival in the first quarter, was in the doldrums. The GDP quarter ring ratio decreased by 1.2% in the two quarter.

In addition, compared with Japan and the United States, the fiscal policy of the euro zone has tightened more, which will facilitate the ECB to adopt a lenient policy to relieve the depressed financial market.

Correspondingly, the yield on German 10 year bonds has fallen below 2.3%.

At the same time, the interest rate spreads in the euro area countries gradually expanded, the gap between Ireland and Portugal was the most significant, and the spreads between Spain and the "five European pigs" were also widening.

Therefore, I believe that although the debt crisis in Europe has gone through the worst period, it is far from complete settlement.

All these factors will limit the euro's rising space.

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Japan's economy is weak, and the yen will not continue to strengthen.

Now the yen has reached its highest level in 15 years.

In the short term, the positive buying of yen assets by overseas investors is the main reason for the relative scarcity of Japanese yen and the rise of the yen index.

But I believe that the weak domestic economy can not afford to continue to strengthen the yen.

In the long run, Japan's economy is shrinking, deflation is serious, interest rate is zero, and the trend of population aging in China does not support its adoption of a strong currency.

The author judges that the yen will not be strong for a long time, mainly considering the following three reasons: first, the Japanese authorities have recognized the seriousness of the domestic economic situation and deflation.

After a long period of inaction, the Bank of Japan has explicitly stated that it should adopt non sterilized intervention measures to effectively alleviate the release of funds.

Secondly, in theory, the Bank of Japan can provide an oversupply of yen at any time to prevent a sharp rise in the yen.

The author believes that whether the Japanese central bank takes this action depends mainly on its tolerance for prices. At present, deflation is widespread in Japan, and the monetary authorities can say that there is nothing to worry about through the non sterilized intervention in the Japanese yen.

Third, the yen has appreciated too much.

Since 2008, the yen has appreciated 30% against the US dollar and nearly 50% against the euro. Such a sharp appreciation can not be attributed to the decline in the domestic price level, so the appreciation of the yen has been too great.

Under the intervention of the Bank of Japan / government, the trend of the yen's strengthening is unsustainable.

To sum up, the author believes that although the US dollar will remain weak in the near future, there is little room for significant depreciation of major currencies.

The renminbi is increasingly pegged to the US dollar, so there is no need to rush the dollar appreciation.