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China removes the USD peg, What are the consequences for us?
Mungo
post Posted: Jul 1 2010, 11:41 PM
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In Reply To: flower's post @ Jul 1 2010, 11:25 PM

Would they still want to purchase as many U.S. treasuries as in the past - I don't think so, more QE coming for the reserve currency - glad i'm not a retiree relying on their savings to get them through, then again maybe they have the midas touch and know how to protect themselves.

 
flower
post Posted: Jul 1 2010, 11:25 PM
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Shanghai looks very oversold---IMO
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China Stocks Drop Signals 65% Rally to Morgan Stanley

"Morgan Stanley, BNP Paribas SA and Nomura Holdings Inc. say stocks will rally as China’s June 19 decision to end the yuan’s two-year peg to the dollar helps curb inflation and asset bubbles. The Shanghai index rose 62 percent in 12 months after China last allowed a more flexible exchange rate in July 2005"

http://noir.bloomberg.com/apps/news?pid=20...id=aoG2qkHmFUxo
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Attached File  SSEC.gif ( 10.32K ) Number of downloads: 9

 




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wasabibarako
post Posted: Jun 22 2010, 09:42 AM
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In Reply To: blueice's post @ Jun 22 2010, 09:11 AM

IF Australia will REMOVE the "K.RUDD peg" (resp. his idiotical idea of punishing mining companies in Australia), that will have a much bigger impact upon the well-being of Australia than any tinkering with the RMB exchange rate. JIMHO, of course.
Hope he and his party will be voted out - the sooner the better...
wasa


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flower
post Posted: Jun 22 2010, 09:37 AM
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In Reply To: blueice's post @ Jun 22 2010, 09:11 AM

In the longer term a stronger Yuan has to be bullish for our commodities, and at least a move has been made.

Big week coming up with the FOMC and G20 meetings.



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blueice
post Posted: Jun 22 2010, 09:11 AM
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An interesting read, as we all probably suspected. So did the markets get ahead of itself yesterday?????????

Wall Street’s yuan rally faded this morning as reality bit: it’s going to be a peg crawl, not a revaluation, it’s unlikely to be the sort of big reflation event the world arguably needs right now, and it might even be bad for bonds and the US dollar.

On the whole, the overnight commentary about China’s weekend announcement, and the 0.4 per cent rise in the yuan yesterday, has been universally sceptical – about China’s real intentions and the impact of its weekend announcement.

And while China’s gesture towards currency flexibility ahead of the G20 meeting in Toronto this weekend and the fact that it started delivering on the promise so quickly yesterday is definitely good news for the world economy and specifically Australia’s, let’s not get carried away.

It is mainly a political, not economic, move – designed to get the Obama administration and US Congress off China’s back. As such the yuan will only rise as much as necessary to achieve that. Most analysts reckon that’s no more than 5 per cent a year and possibly more like 3 per cent.


http://www.businessspectator.com.au/bs.nsf/Article/The-yuan-will-creep-not-jump-pd20100622-6MSNJ?OpenDocument&src=sph


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flower
post Posted: Jun 21 2010, 10:21 PM
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In Reply To: wasabibarako's post @ Jun 21 2010, 09:26 PM

London, 21 June 2010 - The base metals are up strongly this morning on the back of the news that China will let the yuan exchange rate move more freely - a stronger currency will make imports cheaper which should help drive demand for those metals China imports
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Wasa: Just looking at commodities, the above is what base metals.com had to say tonight.

Its all about DEMAND.

If for example Twiggy increases his sales because of the resultant increased demand from China by 30%, it follows that FMG increases sales in USD's by 30%..

Is it likely his costs will rise by 30% or more in AUD----hardly think so.

Anyway lets see what happens in the ensuing weeks to ASX commodity share prices.

Put another way: Is it NOW likely the US/AU rate will climb to $1.15?



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wasabibarako
post Posted: Jun 21 2010, 09:26 PM
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In Reply To: flower's post @ Jun 21 2010, 07:41 PM

flower: The RMB's min. aimed at flexibility is NOT NECESSARILY going to influence other currencies in "expected" ways (i.e. the currencies from commodity based countries like Canada and Australia, for instance) might show bigger fluctuations upwards than the RMB and hence there may NOT be a net gain per se. All JIMHO, of course. And time will tell.
wasa

 
flower
post Posted: Jun 21 2010, 07:41 PM
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In Reply To: wasabibarako's post @ Jun 21 2010, 06:37 PM

Wasa--believe you are somewhat missing the point in as far as it effects the ASX Commodity area.

A stronger Yuan will make Chinese raw material imports cheaper--thereby increasing demand for those materials directly affecting the ASX commodity stocks, we saw some of this today immediately the announcement came through on the first day of trading since the announcement was made in China.

The US has already made the point that any move must major in percentage to be meaningfull, lets see what happens at the G20 meeting.



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arty
post Posted: Jun 21 2010, 07:05 PM
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In Reply To: wasabibarako's post @ Jun 21 2010, 06:37 PM

Agree 100%, Wasa.

... and again the question that really matters: What does it mean in real money? What is the relationship between AUD and Yuan?
Long-term (weekly) chart: nice bounce off 61.8% Fib, resuming the one-year rise (Aussie valued HIGHER in Yuan terms)

Attached File  AUD_vs_Yuan_w_21_06_10.gif ( 21.83K ) Number of downloads: 9

On a Daily scale, last night's announcement hasn't made a noticeable difference at all. Of course, one could split rabbits and claim that Currency Traders somehow "knew" this would happen and started to push the Aussie higher 4-5 weeks ago ph34r.gif

Attached File  AUD_vs_Yuan_21_06_10.gif ( 23.7K ) Number of downloads: 11


But looking at the relationship between the Greenback and Yuan, the unpegging (was it really???) has had a more "dramatic" effect, at least on a Daily scale. ... until you look more closely and calculate the relative change: -0.52%. ohmy.gif

Attached File  USD_vs_Yuan_21_06_10.gif ( 20.98K ) Number of downloads: 11

And on the long-term weekly scale? Again: "ho-hum" blink.gif

Attached File  USD_vs_Yuan_w_21_06_10.gif ( 14.74K ) Number of downloads: 10




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I trade daily, but I am not a licensed adviser. Whether you find my ideas reasonable or not: The only person responsible for your actions is YOU.
I follow two rules: (1) There are no sacred truths. All assumptions must be critically examined. Arguments from authority are worthless. (2) Whatever is inconsistent with observed facts must be discarded or revised. We must understand the Market as it is and not confuse how it is with how we wish it to be. (inspired by Carl Sagan)
 
wasabibarako
post Posted: Jun 21 2010, 06:37 PM
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In Reply To: flower's post @ Jun 21 2010, 05:19 PM

flower: Personally, I shall view anything below a min. sustained 5% appreciation as NOT meaningful at all.... (2.7% expected is really almost nothing... In normally traded currencies, this could be less than a daily fluctuation).
Also, Chinese exporters will just cut their profit by that, say, 2.7% currency influenced increase to remain strongly competitive... And NOTHING will materially change in a really significant way.
All JIMHO, of course.
wasa

 
 


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