Lets get to the point should we really be that surprised of China’s decision to allow greater flexibility of the Yuan? Its boondoggle week, everyone is off to Toronto for the G20. China had to come with a gift so as not to spoil Harper’s party. Beijing is presenting this gift as contributing to the rebalanced of the global economy. Well we should start witnessing the ease of trade tensions and of China’s need to hike rates aggressively. This gift allows China to participate in the fun and games and not have to answer any questions. All we can do is wait and see.
We should already know that the US$ is mixed in the O/N trading session. Currently it is lower against 10 of the 16 most actively traded currencies in a ‘volatile’ trading range.
The dollar has come under some pressure, rightly so, as the China move has created a positive global sentiment and reduced, the safe heaven demand for the USD, pushing equities higher and treasury prices lower. Question in mind are the moves sustainable? The subsequent appreciation of the Yuan is likely to be small, perhaps just a few percent over the remainder of the year. In the grander scheme of things, it’s not a huge deal and after all that will be said and done, trade tensions will always return. Analysts note that a much bigger move would do nothing to boost the global economy without additional steps to increase demand ‘within’ China itself. Overall, the fundamentals for US Treasuries remain positive, perhaps China may have to buy more overseas assets to counter the increased inflows of speculative money in anticipation of further currency gains. The European fiscal crisis remains on the front burner, and is negative for the EUR. With the reduction of market short positions over the last week, this Chinese policy change provides the perfect excuse to sell into the EUR rally.
The USD$ is higher against the EUR -0.06% and JPY -0.31% and lower against the CHF +0.16% and GBP +0.30%. The commodity currencies are stronger this morning, CAD +0.41% and AUD +0.37%. The loonie ended last week recording its second consecutive weekly gain on the back of higher commodity prices and on investors paring of some of the risk-aversion trading strategies. The loonie has remained coveted as speculators increased their bets that economic growth will eventually fuel demand for commodities after the ‘flexible Yuan announcement’. Big picture, the CAD is holding its own after the BOC’s rate hike and somewhat muted and directionless earlier this month. It remains the world’s second best performer vs. its southern neighbor. Using loonies as a safer way to play an economic recovery in the US with linkage to commodities and less banking or fiscal noise has speculators better buyers of the currency on dollar rallies. The AUD managed to print a new month high after China indicated that they would allow the Yuan to appreciate, thus boosting demand for countries who sell products to the world’s third-largest economy. In theory, ‘commodity rich exporting countries should benefit from the increased purchasing power of Chinese manufacturers’. Earlier last week, comments from the RBA, who said that Europe’s debt crisis would ‘inevitably weigh’ on global growth, had fueled speculation that the RBA may keep rates unchanged until at least the end of the year. It seems that that ‘previous rate rises has given them flexibility to leave borrowing costs unchanged at next month’s meeting’. Last week, stronger domestic fundamentals aided the currency. Employment data added +26.9k new jobs vs. an expected +20k. It was the third consecutive month of job gains, emphasizing the RBA’s call that that economic growth will accelerate this year. This pushed dealers into increasing their bets that Governor Stevens will resume the country’s most aggressive round of monetary tightening. So far, it seems that the crisis in Europe has not had a material impact on the Australian economy. With European stress test disclosures lined up and PBOC announcement has temporarily calmed investor’s fears. Technically, the market continues to want to buy AUD on dips (0.8842).
So my personal update today is terrible the fab Turbo has been making horrible trades. it just out of control. When I turn the computer off and re open it has 6 or 7 charts going on and not even smart charts. Today I will be finding out how to modify the expert and symbol properties. That is the only thing I can do. Mess around a little . ( We all know how messing can be quite fun ) ! So if anyone knows anything at all about this feel free to help me out . I will learn it today and tomorrow's blog tell you how to do this step by step to modify , change and mess around. Tomorrow's blog could be fun. Now back to business , candlestick. I have been studying the Japanese candlesticks for many weeks. The best way to do this is by opening a chart change it to monthly view and pull up your information on candlesticks. Here is a link to a great place to learn the basics of candlesticks. http://www.babypips.com/school/what_is_a_candlestick.html. It is definitely worth reading. It is not something that you will learn overnight and if you do WE NEED TO MEET ! anyways hope the blog was useful and if it was not please leave me a comment so I can make sure it is enjoyable for everyone. While your on the blog check out some of the ads. They are worth your time and will take you to sites that is worth reading and learning. Hell why you're at it have a game of pinball and see if you can beat my score !
Cheers. It has been a pleasure writing for you
