Strong euro is key to understanding current global upswing

Dear all, last Friday I resumed – for the new year - my three weekly contribution for the (Italian language) Swiss Newspaper Giornale del Popolo. As always I post the article on LinkedIn with a brief English language summary of it.

The key message of this most recent article is that the #euro is not overvalued and that this is a very important element in explaining the sustainability of the current synchronized upswing in global #economic #growth. The #euro-zone is, in fact, the largest #current #account #surplus holder in the world. As such, the strong euro helps recycling excess savings to #trade deficit countries such as the UK and the US. Most importantly for #financial #markets, the stronger euro is reflected in a weaker #USD, which means that financial conditions are kept accommodative in the United States even if the #Fed is hiking rates. It also means that financial conditions are kept accommodative in most emerging markets which are almost all important trading partners of the euro-zone, but which normally issue their debt in #US dollars, not in #euros, and whose #currency regimes normally float or are pegged (in various degrees and in different forms) to the USD, rather than the #euro.