It is looking like it will be an eventful April for the Renminbi-Dollar marriage.
On April 15, the US Treasury is due to release its annual currency report, and perhaps this will be the year when it decides to label China as a "currency manipulator".
The formal consequence of this is that the Treasury then has to negotiate actively with China about changing its peg.
More importantly, the Commerce department could then decide China is subsidising its exports and Congress could start drafting a bill to justify further trade sanctions and tariffs against Chinese goods. There is plenty of domestic pressure in the US for Congress to do so, with official unemployment at nearly 10% and a workforce angry about their manufacturing jobs being stolen by China.
Last night, Barack Obama called on China to embrace a "market orientated" exchange rate, pointing out that "countries with external deficits need to save and export more. Countries with external surpluses need to boost consumption and domestic demand."
The question is: was he making the speech to diffuse pressure ahead of the Treasury report, and to show the US voters he is on top of the issue, or was the speech a taste of what is to come?
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