Stock around the world rose along with metals on Wednesday as the dollar and the Japanese bond yields took a slight tumble after the Bank of Japan’s monetary easing strategies fired up hopes of more action from central banks to help prop up moribund economies.
European exchanges continue the rally that began yesterday after the Bank Of Japan in a bold move cut its interest rate to near zero. The FTSEurofirst 300 was up 0.4 percent and indexes were up by .05 percent in France, Germany and Britain.
The interest rate cuts in Japan are seen as the first in a round of reflationary moves by Japan, and are expected to be replicated in the US and UK in days to come. The expectation is that the Federal Reserve will begin quantitative easing measures – essentially printing cash to buy asset – next month. The dollar has been kept low because of it.
Strategist are speculating as to whether we are headed for a ‘easing’ stand off between the Bank of Japan and the Fed, with the winner ultimately determining the direction of the yen and dollar relationship.
The dollar’s depreciation has pushed gold and silver along with other traditional ‘safe bets’ into record highs. However the IMF has warned countries against entangling themselves in a ‘beggar-thy-neighbor’ contest, the result of which would ultimately undermine the global economic recovery. They have warned governments away from using currency as a policy option to boost domestic economic growth.
