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• U.S. Treasury Secretary Jack Lew on yen weakness: “We’ll keep an eye on that”
• Italy: Berlusconi on the attack, but “We intend to continue to support this government”
• G7: Draghi says G7 did not call on central banks to do anymore than they already are to boost growth
• G7: Kuroda says he doesn’t expect long-term interest rates to spike as a result of the shift from bonds to equities
• G7: Aso says there was no criticism of Japan’s monetary easing or weak yen
• G7: UK’s Osborne says there is agreement on an “improved outlook” for global economy
• G7 re-assured that Japan is not deliberately attempting to weaken yen

U.S. Treasury Secretary Jack Lew on yen weakness: “We’ll keep an eye on that” Posted: 11 May 2013 05:30 PM PDT The US told Japan it would be watching for any sign of currency manipulation. Said Japan had “growth issues” And attempts to stimulate its economy needed to stay within the bounds of agreement to avoid competitive devaluations “I’m just going to refer back to the ground rules and the fact that we’ve made clear that we’ll keep an eye on that,” Lew told the CNBC business news channel. Doesn’t seem to be of much of significance. Sounds to me like Lew was commenting for the benefit of his domestic audience. Japan is well aware of the scrutiny it is under. U.S. sends Japan currency warning as G7 meets Interestingly, though, Lew did seem to specify which eye he would be using

Italy: Berlusconi on the attack, but “We intend to continue to support this government” Posted: 11 May 2013 05:09 PM PDT With Mike all over the G7, I’ll mop up some Italian politics. Silvio Berlusconi, facing a possible jail term for tax fraud and yet to face trial on other charges attacked the judiciary: “Anyone who is not caught up by political factionalism can see clearly that there are politically motivated magistrates who are blinded by hate and prejudice towards me,” but said there was ‘no prospect’ of him withdrawing support from the Letta government. Italy’s Berlusconi attacks judges but backs Letta government

G7: Draghi says G7 did not call on central banks to do anymore than they already are to boost growth Posted: 11 May 2013 02:48 PM PDT ECB pres on reuters There wasn’t any call to do more. It is quite clear that all cental banks have done a lot, each one within its own mandate.All of us have been very active. Contrary to George Osborne’s pre-summit comments that greater monetary activism to boost recovery would be discussed, suggesting he’s keen for the BOE to act further Draghi also said the ECB should play a “catalytic”, not leading, role in any ABS ( asset-backed securities)  scheme to boost lending ABS allows banks to move some credit risk off their balance sheets by packaging loans up and selling them on to other investors. A scheme that German fin min Schaueble is firmly against and reported by Die Spiegel yesterday  as telling his party it would amount to covert state financing

G7: Kuroda says he doesn’t expect long-term interest rates to spike as a result of the shift from bonds to equities Posted: 11 May 2013 02:43 PM PDT BOJ gov on reuters says it’s natural for nominal long-term rates to rise in the long run if inflation heads to the BOJ’s target level of 2%

G7: Aso says there was no criticism of Japan’s monetary easing or weak yen Posted: 11 May 2013 02:40 PM PDT Japanese fin min on reuters

G7: UK’s Osborne says there is agreement on an “improved outlook” for global economy Posted: 11 May 2013 02:34 PM PDT Yippee says the G7 meeting had been successful and constructive Yippee again The Independent carries this story

G7 re-assured that Japan is not deliberately attempting to weaken yen Posted: 11 May 2013 01:40 PM PDT repeats its commitment not to weaken currencies for domestic gain and re-iterates its commitment to avoid volatility in FX rates There was never going to be a formal communique as such, and one might rightly question the validity/purpose  of this smaller group rather than the more powerful G20, but the general consensus seems to be they accept Japan’s arguments that their dramatic easing on monetary policy is aimed at combatting deflation rather than weaker currency advantage. This should be the green light for further yen selling when markets re-open given that it takes the uncertainty out of the equation but the announcement was hardly a surprise. It will be interesting to see just how much weaker it gets in the early stages. Failure to drop too far will suggest that there rightly should be an air of caution after such rapid falls. Interesting also to note though that the US, Canada and Germany went on record to say they were monitoring Japan very closely. Behind the scenes of G7 and G20 I’m sure there is not such a united front as they wish to portray Goggle the FT’s story ” G7 reaffirms commitment not to depreciate currencies for domestic gain” along with readers comments. The article is gated but you can access with a free registration.

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