Wednesday, April 25, 2007
Macro Man has the champagne on ice, reading to pop the cork when, as seems inevitable, EUR/USD makes a new post-1999 high. Perhaps another rubbish reading on durable goods or housing will do the trick. For the time being, profit taking seems to be the order of the day, taking the other side of demand caused by Voldemort and yet another strong ifo reading in Germany.
In Japan, the trade surplus surged to a record high on an unadjusted basis in March, providing some suggestion that the yen is, indeed, undervalued. Macro Man has never disputed that the yen is undervalued; rather, he has claimed that the yen is not terribly undervalued against the US dollar. It was interesting to see that exports to the US were up only 2.4% y/y, while those to Asia and the EU rose 10% and 13.7% respectively. Yes, Virginia, exchange rates do eventually matter!