Monetary Wars In The US, Japan And Europe Have Become The Focus Of Attention In The Financial Market.

The US dollar continued to weaken in the near future. The US dollar index weakened on Tuesday (May 3rd). It fell for seventh consecutive trading days. It once fell below the 92 barrier, hitting 91.91 at the lowest level, while the non US currencies such as the yen, euro and Sterling came to the carnival. The yen continued to rise 18 month high, and the euro rose to a high level in August against the US dollar.

Compared with the high level recorded in 12 last year, the US dollar index has dropped by about 8%, and the decline has been further expanding.

On the other hand, the currency war seems to be winning the war.

The US dollar has been a relatively strong currency in the past three years, but with the decline in US corporate earnings (because of the strong US dollar, higher commodity export prices and lower sales), economic growth has slowed down.

Therefore, the weakening of the US dollar may provide a buffer for exporters.

However, the weakening of the US dollar has led to stronger yen and euro, which will have more serious consequences for Japan and the euro area. The strength of the yen and euro is a disaster for Japanese and euro area exporters, and it is also caught by surprise.

At the same time, Japan and the euro zone economy were weaker. The Bank of Japan and the European Central Bank have entered the era of negative interest rates, and the Japanese economy has shrunk for a while, and the US dollar has weakened.

At present, the market predicts Japan's 2016

The negative rate is 1.2%; the euro area's inflation rate is 0.2%; the French unemployment rate is higher than 10%, and this data can also be listed for a longer time.

However, there has been a "cancer" phenomenon in Italy. The share prices of some major banks in Italy are still less than half of their book value, which indicates that these banks have suffered serious losses.

Obviously, neither Japan nor the euro zone is currently a good time to implement austerity policies and boost currency appreciation.

But Japan and the euro area are facing this situation.

The Japanese yen, the euro and the dollar compete for hegemony.

The Japanese government is preparing to focus on the role of fiscal spending in tackling the uncertainty of the global economic outlook at the G7 summit.

The G-7 leaders' meeting will be held in Japan in 26-27 May, and will be discussed in various countries.

And structural reform.

Leaders of Italy and Japan said on Monday (May 2nd) that they hoped that leaders of the G7 meeting this month could support their proposal to increase spending and stimulate global economic growth.

But Makotoshinohara Hisano, a former foreign exchange policy official at the Ministry of finance, said G-7 countries are unlikely to accept Japan's approach to prevent yen appreciation.

However, from the current situation, though

Many countries and people have asked for more public spending to boost economic development, but they are opposed by Germany, which is more satisfied with the current situation and inflation in the eurozone.

But if the yen and the euro continue to rise as they did last month, the balance will shift from economic stability to economic growth.

Such a situation happened when the Chinese government increased trillions of dollars in investment and led to a rebound in commodity prices.

Because no country can sustain large-scale borrowing and expand spending, the effect of this spurious stimulus is limited, and the duration is short. In the end, it will lead to a fall in commodity prices and even lead to an economic return to the level of the economic crisis.

Of course, increasing public spending may also be a "sacrifice".

Because the Central Bank of Europe and Japan have entered the era of negative interest rates, the scale of easing is two times, three times or even four times that before, and the debt level of many countries is also rising linearly.

But increasing spending is not a panacea. Debt growth may boost economic growth in the short term. But in the long run, debt may also inhibit economic activity, and the current global situation is the latter.

In short, no matter how Germany opposes or has other ideas, the euro zone policy will turn to the strategy of stimulating the economic growth on a large scale, and increasing public expenditure is inevitable.

It may also be a "life and death decision" faced by Japan and the euro area.

Once the prospect of increasing public spending is clear, the objection will be dissipated through the bankruptcy of the Bank of Italy.