The talk of currency wars has heated up the headlines of financial papers. With the US and Japan initiating stimulative measures on their currencies, and others following suit, there is alot of talk about who is going to "win" the war and devalue their way to an export driven recovery.
I think that the true winner has yet to enter the fight; Europe. With the majority of the EU countries contracting and the larger core countries starting to slow down, the opportunity for a cut in rates and outright monetary policy is possible, and even warranted. The union cannot afford to have their economies shrink at the expenses of developed countries devaluing their way to competitiveness. Because of this the ECB will have to take part in the fight and do so agressively to keep growth rate above the average interest rate, thus creating true growth.
To this end I would like to see the Euro zone countries take more stimulative actions that will stem the rise in the Euro and even reverse it in the future, this will be the only way to keep foreigners buying their goods as the rest of the world looks to take their market share. This week's ECB meeting will hopefully address this concern and provide some light on the level of interest this has gotten with the ECB.