…but money talks (to paraphrase Neil Diamond)
And china has lots of it. Beijing has established a new global infrastructure development bank to rival the World Bank, and its efforts to have it accepted in the West have apparently not been to the satisfaction of the US. America has been calling on China to devote funding for global development for some time, but it expected this to happen under the auspices of the World Bank, which Washington dominates, to the extent that it is prepared to use it to further its foreign policy.
The new bank is to be called the Asian Infrastructure Investment Bank (AIIB). While China will be the lead member, it has pledged that it will not exercise any power of veto over its decisions. It did this in order to attract other founder members. On foot of the undertaking the UK, Germany, France and Italy have all declared their intention of giving support. Australia could be only days away from also agreeing to become a founder member. And yesterday, the head of the IMF, Christine Lagarde, while on a visit to China, made comments welcoming the creation of the new institution. She said that her organisation would be delighted to cooperate with the new bank.
You can read more about it here.
High volatility around US CPI release
The Euro was moving up nicely against the US dollar yesterday in a continuation of its tendency since the FOMC monetary policy statement in the middle of last week. Then, inflation figures in the US, which were released yesterday at 12:30 GMT, came in somewhat higher than previously. This was enough to sow confusion in the Forex market, because higher inflation would be one of the more important factors influencing the Fed to raise core interest rates.
The market vacillated for a full 30 minutes before deciding to go with the Greenback, and against the trend for the day up to that point.
These are the conditions that provide challenge to Foreign Exchange traders. Happily, the OmiCronFX Mandelbrot algorithmic routine is up to it.