Are we in an “unspoken” currency war?

•      Are we in an “unspoken” currency war?

•      The People’s Bank of China (PBoC) cut its reserve requirement ratio (RRR) by 50 bps to 19.5%,  in an attempt to keep the Chinese economy stable.

•      AUD and NZD jumped on the news but gave back the gains in the following hour.

•      Many central banks in their attempt to fight low inflation and growth have taken unprecedented stimulus measures and eased their policies to spur growth.

•      With interest rates near zero for many countries –or even negative in many cases- and with binding fiscal constraints, it seems that the only tool left to stimulate growth is a weaker exchange rate.

•      But if everyone is playing the same game and everyone devalues its currency, then who wins? The only “sure” thing is more and higher FX volatility

•  ECB toughened its stance with Greece’s new government by restricting financing to its direct liquidity lines. Greek Finance minister meet its German counterpart today for another “NO” on their requests.

•      Today:

•      Germany: Factory orders for December

•      UK: Bank of England policy meeting

•      Sweden: Industrial production for December

•      US: initial jobless claims for the week ended Jan.31 and trade balance for December

•      Several speakers with the most important. ECB Governing Council member Klaas Knot will speak in Dutch Parliament on ECB’s quantitative easing program.