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Foreign Currency, Discussion
flower
post Posted: Nov 11 2013, 11:48 PM
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Further escalation in the currency debasement war:

http://www.bloomberg.com/news/2013-11-11/r...currencies.html


The global currency wars are heating up again as central banks embark on a new round of easing to combat a slowdown in growth. The European Central Bank cut its key rate last week in a decision some investors say was intended in part to curb the euro after it soared to the strongest since 2011. The same day, Czech policy makers said they were intervening in the currency market for the first time in 11 years to weaken the koruna. New Zealand said it may delay rate increases to temper its dollar, and Australia warned the Aussie is "uncomfortably high."

"It's a very real concern of these countries to keep their currencies weak," Axel Merk, who oversees about $450 million of foreign exchange as the head of Palo Alto, California-based Merk Investments LLC, said in a Nov. 8 telephone interview. ECB President Mario Draghi, "persistently since earlier this year, has been trying to talk down the euro," Merk said.

With the outlook for the global economy being downgraded by the International Monetary Fund and inflation slowing to levels that may hinder investment, countries and central banks are revisiting policies that tend to boost competitiveness through weaker currencies.

Mantega's 'War'
The moves threaten to spark a new round in what Brazil Finance Minister Guido Mantega in 2010 called a "currency war," barely two months after the Group of 20 nations pledged to "refrain from competitive devaluation."

"We're seeing a new era of currency wars," Neil Mellor, a foreign-exchange strategist at Bank of New York Mellon in London, said in a Nov. 8 telephone interview.

etc etc etc



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Combining Fundamental comments with Fundamental charts.
 
flower
post Posted: Jun 28 2012, 09:48 AM
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http://in.reuters.com/article/2012/06/27/e...E8HB00620120627

(Reuters) - There is no doctrine that interest rates cannot fall below 1.0 percent, European Central Bank policymaker Peter Praet told Financial Times Deutschland according to a preview of an interview to be published on Thursday
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If effective interest rates ALL fall below zero, that means that depositing cash anywhere other than Australia seems suicidal, at least we have retained our Central Bank entegrity.



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Dave_vic_ozz
post Posted: Jun 27 2012, 03:06 PM
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In Reply To: triage's post @ Jun 27 2012, 02:59 PM

After my little chat at the airport last week to a bloke from USA in China, The Chinese have had to deal with a few defaults on their exports to USA and EU. - I would not read too much into it, ATM. If it becomes overt then - yeah, take action but for now it is good to know.

Thanks for th heads up.



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My comments reflect the moment in which they were posted.
Everything can change, and usually does, without notice.
 
triage
post Posted: Jun 27 2012, 02:59 PM
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In Reply To: Dave_vic_ozz's post @ Jun 27 2012, 11:51 AM

Dave

Yeah mate as I have indicated I am not sure how all these things are interconnected but I think what the FT blogger is suggesting is that the corporates in China are experiencing a shortage of USD's which is restricting their ability to complete contracts that are written in USD's (rather than the corporates not having a sufficient need for the commodities). She admits that this reading is counter to the common view. She is in effect suggesting that currently there is a liquidity issue more so than an activity problem for some Chinese operators.

I would think that the Chinese authorities could trade with the corporates some USD's for some RMB's if they thought things were getting out of hand: after all they are sitting on over a trillion of them. So I don't think the blogger is suggesting that there is a serious problem here, rather she is noting that the indications - instances of Chinese operators defaulting on commodity deals - could be symptomatic of a tightening in the supply of USD's for Chinese operators. My impression is she is not attempting to explain the meaning of life in her article, rather she is merely analysing current conditions which may or may change in coming days and weeks.



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"The market can stay irrational longer than you can stay solvent." John Maynard Keynes

"The crisis takes a much longer time coming than you think, and then it happens much faster than you would have thought." Rudiger Dornbush

Mozart fixes everything and Messi is a dog
 
flower
post Posted: Jun 27 2012, 02:32 PM
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In Reply To: triage's post @ Jun 27 2012, 11:10 AM

QUOTE
It seems to me that the biggest play in the currency markets in recent years has been how China has in the space of a dozen years or so gone from holding very few USD's to being the biggest investor in the greenback (apart from the yanks themselves of course). So if there were any great disruption to that trend then there would be major ramifications throughout the currency markets.


Instead of all these conspracy theories about China shorting the USD, could the fact that China owns so many valueless USD's today be due entirely to the fact that for many years past China has been buying US bonds to prop up America itself?

The crunch comes when China has run out of patience bailing the USofA out of its many crises and starts to SELL their 30% holding in US debt--ie China has bought 30% of US paper, but will not act as banker for ever, they will sell at a time chosen by themselves.



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Dave_vic_ozz
post Posted: Jun 27 2012, 11:51 AM
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In Reply To: triage's post @ Jun 27 2012, 11:10 AM

OR -

China is indeed slowing and does not need as much cash on hand?

Recent reports that China trades with more countries outside the USD norm?

Political status in China still unsettled and some examples are being made within the party.

Connected Business Man 1 - I need USD

Gov - no

Connected Business Man 1 - default

Gov - jail for you, let that be a lesson to you all.

It is a complex place.



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My comments reflect the moment in which they were posted.
Everything can change, and usually does, without notice.
 

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Dave_vic_ozz
post Posted: Jun 27 2012, 11:39 AM
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In Reply To: triage's post @ Jun 27 2012, 11:10 AM

Triage,

Love the post.

USD has strength verse yuan due to Chinese shorters.

If QE3 ever starts (election timing?) it would exacerbate Chinas short?

Interesting thoughts. smile.gif

Dave



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My comments reflect the moment in which they were posted.
Everything can change, and usually does, without notice.
 
triage
post Posted: Jun 27 2012, 11:10 AM
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Another challenging post from the FT's blogsite, alphaville.

Challenging for me in two respects. Like crooky, I struggle to come to grips with some of the relationships that are referred to in this discussion, and as such there is a solid chance that what I think I am reading is a long way from what was actually written. But - assuming I have managed to grab at least some of the meaning being expressed - it is also challenging in respect to what I understand is the current state of play in the currency markets.

It seems to me that the biggest play in the currency markets in recent years has been how China has in the space of a dozen years or so gone from holding very few USD's to being the biggest investor in the greenback (apart from the yanks themselves of course). So if there were any great disruption to that trend then there would be major ramifications throughout the currency markets.

From what I understand the article to be saying it seems that corporate China has in effect been shorting the greenback for the last decade or so, presumably on the assumption that the yuan would continue to strengthen against the USD. But there seems some indications that like in 2008 corporate China is attempting to cover that short position to some degree. Outward indications of this is the reports that in recent months some Chinese importers have defaulted on commodity contracts and that inventories in China of several hard commodities are at record levels: the logic being that some Chinese operators cannot source enough USD's to pay for the commodities.

Now in all probability the Chinese authorities know exactly what is happening here and know what needs to be done to keep the situation under control. The worst case scenario would I guess be that things happen so quickly and or violently that the authorities lose control and there becomes a stampede from corporate China to cover their short position in greenbacks. But seeing neither the US authorities nor the Chinese authorities would find any benefit in such an uncontrolled situation both would act to prevent it and as such it becomes a highly improbable scenario.

The more realistic scenario is that unlike in the previous decade it will be the renminbi and not the greenback that will be moving into a headwind as corporate China moves to unwind its short position. In other words the steady breeze from China may now be supporting the USD to remain stronger. I guess this would flow on to how the Aussie behaves relative to the USD (?).

As I say I am painfully aware that I am not on top of this stuff so if those more knowledgeable wish to correct me then I would value the lesson being offered. smile.gif

http://ftalphaville.ft.com/blog/2012/06/26...t-usd-position/



--------------------
"The market can stay irrational longer than you can stay solvent." John Maynard Keynes

"The crisis takes a much longer time coming than you think, and then it happens much faster than you would have thought." Rudiger Dornbush

Mozart fixes everything and Messi is a dog

Said 'Thanks' for this post: Dave_vic_ozz  
 
early birds
post Posted: May 30 2012, 12:38 PM
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Nikkei…Negative Surprise But a Buy Into Summer Low!

By completing a major bottom and on the back of the long-term trend breakout in the USDJPY we have been quite bullish

on the Nikkei in Q1 and given the trend reversal in the USDJPY we said that the impulsive Q1 bull leg should be just the

beginning of a new major bull cycle, in which the Nikkei should move into a systematical outperformer versus the world.

Keep in mind, the breakout in the USDJPY we saw and still see as the beginning of a 4 year lasting bear market in which

the JPY should lose at least 35% of its value. This call remains unchanged as long as the JPY does not break 76, which

represents the early February reaction low.

However, following our macro view by expecting a new risk off leg into summer we anticipated a new but final

down leg in US yields into June/July. From a correlation standpoint it was clear that this could provide at least a

temporary negative surprise in the USDJPY and also in the Nikkei before we should see a new bull leg starting in

the Japanese market. Tactically, we warned about chasing Japan higher in our March 20th weekly comment. After

completing an impulsive wave 5 sequence we basically expected the Nikkei starting a longer lasting correction into

June/July. At the end of the day the magnitude of the current correction leg has been a surprise for us, since the bounce

attempt in late April completely failed. However, as long as the Nikkei does not break its November low at 8135 this does

not change the strategic picture of the market



Conclusion: The current correction in the Nikkei is stronger than expected but with heading into June, the

Japanese market is moving into the time window of our

low projection that we gave out in late March. From a

cross asset class perspective, and in line with our 2012

strategy, we see US bond yields on the way into a major low

this summer and in this context we see the USDJPY

currently forming the right shoulder of a major inverted

head & shoulder pattern. Consequently, over the next

few weeks we expect both the USDJPY and the Nikkei

moving into a major long-term buying opportunity. On a

short-term basis into June we still see the opportunity to

overshoot towards 78/77.50, whereas a daily break of 80.50

would be initially bullish for the USDJPY. The Nikkei we

expect re-testing its November/December bottom but our

key call is unchanged. We are looking for a major

reversal in June/July as the starting point for at least

another strong tactical rally before into Q4 we could see

a new litmus test on the downside, which however we

wouldn’t expect to make new lows.
=============


from UBS.



 
early birds
post Posted: May 30 2012, 11:36 AM
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In Reply To: early birds's post @ May 29 2012, 03:38 PM

not sure what is going on with so much strength in JPY.
my stop got hit again! it looked so good yesterday. didn't take profit{ thought it will go pass 0.79}
oh well, gonna watch it from the fence now!!

 
 


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