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CHINA is selling the dollar

  • #41
  • Nov 10, 2006 12:44pm Nov 10, 2006 12:44pm
Quoting FXopportunist
Ya know I shorted the Dollar/Yen yesterday as soon as the china statement hit the wire @ 118.17. I jumped out for a 17 pipper and was quite pleased with myself for capitalizing on the news

It just never occurred to me at the time that it would spark such a nice move.

It reminds me of one of my favorite old songs: stealin' when I shoulda' been buyin'

Bet nobody can tell me what group that was. And bonus points if you can tell me the singer
Uriah Heep with Stealin'. Off of their 1973 album "Sweet Freedom". I believe it was Ken Hensley on the vocals for that one.
  • #42
  • Nov 10, 2006 2:30pm Nov 10, 2006 2:30pm
Some questions:

What is the (new) information content of Zhou's statements?

If it is mostly old news, has the USD has sold off too easily (any bad USD news is latched on to when the mkt is a net seller and vice-versa when it is a net buyer)? It only takes a minor factor to create a cascade effect that leads to a new trend, but are we at that point?

If Zhou has merely spooked the market by allowing the diversification issue to re-surface when the USD was at the weaker end of the range, what is the justification for this additional premium to remain over a longer time horizon?

I ask myself these questions and find mostly USD bullish answers (no surprises there then!).
"Always bet on black"
  • #43
  • Nov 10, 2006 3:00pm Nov 10, 2006 3:00pm
Something I don't understand here.
If the USD gets weaker that means the cost of China's goods in this country goes up.
That means we buy less.
That means that China's economy suffers.
So what makes anybody think that China would want a lower USD.
Just ask yourself what you would do if you where a leader there and responsible for the lives of a gazillion people.

Just another thought.
  • #44
  • Nov 10, 2006 3:21pm Nov 10, 2006 3:21pm
Quoting bapxyz
Something I don't understand here.
If the USD gets weaker that means the cost of China's goods in this country goes up.
That means we buy less.
That means that China's economy suffers.
So what makes anybody think that China would want a lower USD.
Just ask yourself what you would do if you where a leader there and responsible for the lives of a gazillion people.

Just another thought.
As I said, Zhou was interpreted wrongly..

I wonder if he spoke in english on or chinese. if the latter, he can get away with it. if he spoke in english when he made the first comment on diversification, then he has a lot of answering to do back in china.
  • #45
  • Nov 10, 2006 3:35pm Nov 10, 2006 3:35pm
Quoting BurgerKing
As I said, Zhou was interpreted wrongly..

I wonder if he spoke in english on or chinese. if the latter, he can get away with it. if he spoke in english when he made the first comment on diversification, then he has a lot of answering to do back in china.

AA HA
The intrigue. As with all dealings with the Orient everything is another "Maltese Falcon".
We need to watch some re-runs of Charlie Chan.

And yes I know he really was not Chinese
  • #46
  • Nov 10, 2006 3:37pm Nov 10, 2006 3:37pm
Quoting bapxyz
Something I don't understand here.
If the USD gets weaker that means the cost of China's goods in this country goes up.
That means we buy less.
That means that China's economy suffers.
So what makes anybody think that China would want a lower USD.
Just ask yourself what you would do if you where a leader there and responsible for the lives of a gazillion people.

Just another thought.
They my not have a choice, especially if the dems start screaming about tariffs...and a trade balance works both ways by making our goods and services a little cheaper for them....

There's always gonna be a trade deficit with china anyway...but it needs to be brought a little under control.
  • #47
  • Nov 10, 2006 4:10pm Nov 10, 2006 4:10pm
Textile is one Chinese product that has reached its quota. This is why textile price kept dropping as manufacturers vie for quota by competing with other manufacturers..

Likewise some Chinese manufacturers are putting up factories outside of China. We have several of them here in the Philippines exporting to USA.

Net effect - same Chinese export to USA, albeit with a different "brand, label, origin"...

Trade Balance cannot be eradicated with quota, tariffs. US government can impose the tariffs. but you may end up like the China-Japan trade problem last year (or two? )
Japan dumps Chinese agricultural produce; China dumps more expensive Japanese Electronics. End result Japanese electronic manufacturers as biggest looser.

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.
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Anyone with short USD positions? FXCM's IFR has been screwed several times with their trades the past few days. They had a long USDJPY only to be stopped out when USDJPY moved down to 117.50... then they went long EURUSD, GBPUSD... I bet they are beating their heads now that China/Zhou recanted...
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  • #48
  • Nov 10, 2006 4:18pm Nov 10, 2006 4:18pm
Quoting BurgerKing
Textile is one Chinese product that has reached its quota. This is why textile price kept dropping as manufacturers vie for quota by competing with other manufacturers..

Likewise some Chinese manufacturers are putting up factories outside of China. We have several of them here in the Philippines exporting to USA.

Net effect - same Chinese export to USA, albeit with a different "brand, label, origin"...

Trade Balance cannot be eradicated with quota, tariffs. US government can impose the tariffs. but you may end up like the China-Japan trade problem last year (or two? )
Japan dumps Chinese agricultural produce; China dumps more expensive Japanese Electronics. End result Japanese electronic manufacturers as biggest looser.
I could not agree more. "Let the cream rise to the top". Free trade works. Maybe not the way everyone wants it to but to the best interest of everyone in the end.
The big problem "besides idiots" here in the US is that many will use this tariff idea to get votes. Just as they do for almost all wellfare type programs.
Yes I said that tariffs are a form of wellfare for those that are afraid or incapable of compeating on the world stage.
  • #49
  • Nov 10, 2006 4:38pm Nov 10, 2006 4:38pm
Quoting BurgerKing
Play smart.. dont be fooled with the uptrend. it is already TOO LATE to go long... it MAY PROBABLY go higher... I'd rather dont earn a pip on it than be fooled and loose a big. I'd personally SHORT it at 9175 if I manage to watch it climb back again.. Statistically, highs dont stay too long GBPUSD..
I really missed that 1.9175
  • #50
  • Nov 10, 2006 4:38pm Nov 10, 2006 4:38pm
Quoting Hagbard Celine
Uriah Heep with Stealin'. Off of their 1973 album "Sweet Freedom". I believe it was Ken Hensley on the vocals for that one.
My man!! Great old song
Profit is where readiness meets Opportunity
  • #51
  • Nov 14, 2006 3:19pm Nov 14, 2006 3:19pm
It is official, China is diversifying into Euro, not gold as rumored!
  • #52
  • Nov 14, 2006 3:25pm Nov 14, 2006 3:25pm
Quoting BurgerKing
It is official, China is diversifying into Euro, not gold as rumored!
Article to support this burger and if so that means EURO gonna go up then?
Ghost Swoopen in for my pips while no one is lookin !!
  • #53
  • Nov 14, 2006 3:44pm Nov 14, 2006 3:44pm
they can sell as much as they want, its yesterdays news, and they, aint gonna sell all in one day.

and did the chinese government just approve legislation to allow chinese fund managers, pension fund managers and banks to raise there investment holdings in the us. just a couple of days later, a total of around 850 million per month, a drop in the ocean compared with the 42 trillion being traded on the forex every month.. you wont event notice it!!
  • #54
  • Nov 14, 2006 4:13pm Nov 14, 2006 4:13pm
Ghost,

to answer your question, I heard that over at Bloomberg and CNBC TV.

magicfx,

Indeed, this is OLD news that people have already "priced in" already. At this stage, I dont think it could hurt the USD unless as you said, china heavily unload their USD holdings. That would mean economic suicide for the part of the chinese (ie, USD drops, chinese export to US go up = less trade for chinese)!

Personally, I am leaning towards the USD bull at this moment. Heck it is at the low right now - and Christmas Economy is just around the corner!!!
  • #55
  • Nov 16, 2006 3:10am Nov 16, 2006 3:10am
Quoting BurgerKing
Ghost,

to answer your question, I heard that over at Bloomberg and CNBC TV.

magicfx,

Indeed, this is OLD news that people have already "priced in" already. At this stage, I dont think it could hurt the USD unless as you said, china heavily unload their USD holdings. That would mean economic suicide for the part of the chinese (ie, USD drops, chinese export to US go up = less trade for chinese)!

Personally, I am leaning towards the USD bull at this moment. Heck it is at the low right now - and Christmas Economy is just around the corner!!!
Hi burger,

What you have said above is correct, but I think that there is another issue which is much more important.

That is, China now has a Trillion US dollars in foreign exchange reserves. The US is hopelessly in debt to all major countries.
This means that China now effectively controls the level of the US dollar...and has done since early 2005

Technical analysis (Elliott Wave, etc) is built on the premise that markets move according to mass psychology of its participants.

There has now been a seismic shift in the USD Forex market...it is now quietly and surreptiously controlled by China. (for every 0.01 Euros increase above 1.2500, China's foreign exchange balance drops USD $8 Billion...so they will strongly protect that asset)

The USD based currencies will trade in a band (Euro 1.2500 -1.3000) for the foreseeable future...because
1. if it goes over 1.3000 China's manufacturers become less competitive and China has a superordinate goal of world dominance in manufacturing
2. if it goes under 1.2500, China risks a strong over-reaction from the US

(Please note: I only trade Euro/USD so if you trade yen, pound etc, then replace those figures for Euro)

Again, the key point here is that to trade this market successfully, the best strategy (IMO) is to trade the 1.2600 to 1.2900 range over the longer term.
  • #56
  • Nov 23, 2006 4:17am Nov 23, 2006 4:17am
Quoting jacko
Again, the key point here is that to trade this market successfully, the best strategy (IMO) is to trade the 1.2600 to 1.2900 range over the longer term.
My Long USD positions are killing me. I underestimated the holidays.

But going back to China's forex diversification. This piece of news is not FOREX related or anything for that matter but you'll all get a laugh at it!

China is buying Philippine Peso!
That is right! The Philippine Peso! Not for the FX but the COINS!
Philippine Peso coins contain more Nickel and Copper than the value it holds and some Chinese businessmen were caught buying the Peso and shipped to China to be melted down as Nickel and Copper materials!

The Philippine Government was an idiot to have devaluated the Peso.
  • #57
  • Jun 4, 2009 9:38pm Jun 4, 2009 9:38pm
Quoting jacko
Good analysis NewstraderFX,

China has a goal of world trade dominance. They are now officially the second largest economic power in the world. They just blew Germany away into a distant third place.

They will keep their currency low to undermine all the other currencies and give them a strong trade advantage (read: Destroy the manufacturing industries of the West).

Some time ago, just after the Chinese govt-backed company Lenova bought IBM, I heard a rumour that their next big target was General Motors. (General Motors bonds are junk...
How does Jacko know these things so far in advance? This was posted in November 2006
  • #58
  • Last Post: Jun 7, 2009 12:28am Jun 7, 2009 12:28am
Quoting jacko
Hi burger,

What you have said above is correct, but I think that there is another issue which is much more important.

That is, China now has a Trillion US dollars in foreign exchange reserves. The US is hopelessly in debt to all major countries.
This means that China now effectively controls the level of the US dollar...and has done since early 2005

Technical analysis (Elliott Wave, etc) is built on the premise that markets move according to mass psychology of its participants.

There has now been a seismic shift in the USD...

Jacko,

Is this still true? Is China in control? Or are they being held hostage by the Fed? What is the likely outcome?
Your post about GM was prescient. http://www.forexfactory.com/showpost...postcount=1893

What can you tell us about the future of the Euro?
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