ECB President Trichet said that exchange rates will be discussed at the upcoming G7 meeting, but it seems that the currencies in question will be Chinese Yuan, US dollar and Japanese Yen.
He did not say that the Euro was one of the problems and this view continues to be supported by German officials. The latest comments come from Germany?s Finance Minister who explicitly indicated that he supports a strong Euro. Unsurprisingly, the German trade surplus narrowed in August. The impact of the currency?s rise continues to be more apparent in German data than French data even though the French have been screaming far louder than the Germans about the current level of the Euro. During the same month, the French deficit actually improved. Euro bears should not expect to get any support from the ECB in the near future.
Written by Kathy Lien, Chief Currency Strategist for DailyFX.com