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News Events / Shocks

  • #1
  • First Post: Mar 25, 2009 11:48am Mar 25, 2009 11:48am
We've just had - IMO - two very important News Events that MAY have a big influence on many currencies in the days to come, so I thought I'd open a thread to get a few opinions.

These News Events were: The first failure of a UK Gilt (bond) Auction in more than 10 years. This means that the UK Government were unable to Sell all of the gilts that they had on offer.....now remeber that they have LOADS of these to sell as PM Brown and gang are borrowing the UK into the ground and need truck loads of new money to keep them popular / in power etc - they call it something else, but lets get real......http://www.forexfactory.com/images/icons/icon12.gif

2009.03.25 10:57:08 MARKET TALK: Sterling Drops On Poor Gilt Auction

Anyone taking a long term short in cable and assosciated pairs? mmm, read on.....

The second News Shock happened a couple of minutes before the better than expected US Home Sales data, when Mr Geithner - he's some big wig in the US govnment - said that he didnt mind a new currency to replace the Dollar........OMG........the Amero raises its head - again.....or will it be a Chinero??

2009.03.25 13:57:16 *Dollar Drops After Geithner Says Open To SDR Currency

NEW YORK (Dow Jones)--The dollar declined to session lows against the euro and yen after U.S. Treasury Secretary Timothy Geithner said he was open to considering a new global reserve currency.

That's what caused the 160 pip spike in Euro / Cable / Swissy etc

So we have cable that's had a kick in the you know whats and the dollar now about to be moved into the Old Folks Home aka Chapel of Rest........

Now this is what I call an eventful day - those FunnyMentals really have had their cage rattled - big time......

Toodle Pip

Islander

PS I also trade in Dubloons......http://www.forexfactory.com/images/icons/icon10.gif
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  • #2
  • Mar 25, 2009 12:26pm Mar 25, 2009 12:26pm
LOL - even Mexico can sell pesos:

2009.03.25 15:31:30 Bank Of Mexico Sells $100M In Dlr Auction At Avg MXN14.3233/Dlr
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  • #3
  • Mar 25, 2009 2:56pm Mar 25, 2009 2:56pm
Nice thread Islander. The reserve currency news is going to be catastrophic for the dollar.

Short term on rumors but if they change it forget it. This in my opinion is much worse than when there was talk about pegging Crude to the euro. I feel for anyone long the dollar today.
The trend always ends.
  • #4
  • Mar 25, 2009 4:26pm Mar 25, 2009 4:26pm
Quoting ShamusFamous
Nice thread Islander. The reserve currency news is going to be catastrophic for the dollar.

Short term on rumors but if they change it forget it. This in my opinion is much worse than when there was talk about pegging Crude to the euro. I feel for anyone long the dollar today.

Hey Shamus - thanks for your input.....I seem to remember that the crude idea was pushed by Iran - and so didnt get off the ground. China are backing this new currency idea and IMO that's a whole different ball game.....
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  • #5
  • Mar 25, 2009 4:47pm Mar 25, 2009 4:47pm
Watch out guys, the markets could seriously tank sooner rather than later. Keeping my eye on DOW, Gold, dollar and oil as adding to E/U A/U longs.
US auction was flop also I believe.

Government gone wild for spring break.
  • #6
  • Mar 25, 2009 4:49pm Mar 25, 2009 4:49pm
Maybe my logic is flawed, but it would seem that China and it's vast US Treasury Holdings would suffer with the falling Dollar. China likes to keep it's currency pegged to the Greenback to promote it's exports.

Unless they are now wanting to expand their involvement into the Global currency markets, this seems ,imho, as posturing.

Somethings going on behind the scenes and they are trying to push their weight around. Talk of ceasing US treasury purchases, ( which may be secretly behind the latest Fed purchase ) to now talk of a new basket currency. They want something from the New President, and they ain't getting it atm.

Maybe Geithner was giving them a taste of their own medicine.

just my delusional thoughts,

http://www.telegraph.co.uk/finance/e...s-markets.html
  • #7
  • Mar 25, 2009 5:00pm Mar 25, 2009 5:00pm
Quoting chase
Watch out guys, the markets could seriously tank sooner rather than later. Keeping my eye on DOW, Gold, dollar and oil as adding to E/U A/U longs.
US auction was flop also I believe.

Government gone wild for spring break.
LOL - I like that....
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  • #8
  • Mar 25, 2009 5:03pm Mar 25, 2009 5:03pm
Quoting auxesis
Maybe my logic is flawed, but it would seem that China and it's vast US Treasury Holdings would suffer with the falling Dollar. China likes to keep it's currency pegged to the Greenback to promote it's exports.

Unless they are now wanting to expand their involvement into the Global currency markets, this seems ,imho, as posturing.

[b]Somethings going on behind the scenes and they are trying to push their weight around. Talk of ceasing US treasury purchases, ( which may be secretly behind the latest Fed purchase ) to now talk of a new basket...

Thanks for an interesting post.....
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  • #9
  • Mar 25, 2009 7:52pm Mar 25, 2009 7:52pm
I read the story on Bloomberg about the gilts and it commented that the uptake may have been low because of year end.
First impressions were.."why sell at this time"?
Also Geithner..why say what he did?

People who run CB's are not stupid (surely)They must have ulterior motives

Ties in with what auxesis says http://www.ft.com/cms/bfba2c48-5588-...5&fromSearch=n
The greatest enemy of a good plan is the dream of a perfect plan.
  • #10
  • Mar 26, 2009 1:59am Mar 26, 2009 1:59am
Quoting steve10%
I read the story on Bloomberg about the gilts and it commented that the uptake may have been low because of year end.
First impressions were.."why sell at this time"?
Also Geithner..why say what he did?

People who run CB's are not stupid (surely)They must have ulterior motives

Ties in with what auxesis says http://www.ft.com/cms/bfba2c48-5588-...5&fromSearch=n


Thanks - that's a good link to the FT http://www.forexfactory.com/images/icons/icon14.gif
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  • #11
  • Mar 26, 2009 2:12am Mar 26, 2009 2:12am
the chinese should first un-pegg their currency , after that they might be taken seriously.
  • #12
  • Mar 26, 2009 2:56am Mar 26, 2009 2:56am
Quoting arthurb
the chinese should first un-pegg their currency , after that they might be taken seriously.
I thought they had - that's what that FT link above showed.....
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  • #13
  • Edited 3:42am Mar 26, 2009 3:36am | Edited 3:42am
Quoting Islander
I thought they had - that's what that FT link above showed.....
this is eur/cny

http://finance.yahoo.com/q/bc?t=1y&s=EURCNY%3DX&l=on&z=m&q=l&c=eurusd%3Dx
  • #14
  • Mar 26, 2009 5:13am Mar 26, 2009 5:13am
Quoting Islander
I thought they had - that's what that FT link above showed.....
No, the Chinese have allowed a gradual appreciation of their currency, which has been done at such a pace to always ensure their exporters maintain a distinct competitive advantage. That is why they often take pauses in this process.

It must be remembered that the global imbalances accumulated over the past decade are one of the biggest contributory factors to the mess we are now in. The global economy cannot hope to make a sustainable recovery without first addressing these imbalances.

ArthurB, well said.
  • #15
  • Mar 26, 2009 5:39am Mar 26, 2009 5:39am
Quoting gammase1
No, the Chinese have allowed a gradual appreciation of their currency, which has been done at such a pace to always ensure their exporters maintain a distinct competitive advantage. That is why they often take pauses in this process.

It must be remembered that the global imbalances accumulated over the past decade are one of the biggest contributory factors to the mess we are now in. The global economy cannot hope to make a sustainable recovery without first addressing these imbalances.

ArthurB, well said.
yet another reason they fear is "hot money" , i have experienced it on my skin during last summer
  • #16
  • Mar 26, 2009 5:52am Mar 26, 2009 5:52am
Quoting arthurb
yet another reason they fear is "hot money" , i have experienced it on my skin during last summer
Good point.... But is that still a big a problem now as it was, say, this time last year? I would have thought not, seeing as the Chinese have reversed many of the policies put in place to counter the influx of "hot money", mainly through reducing banks' reserve requirements, in a bid to stimulate credit growth and the wider economy.
  • #17
  • Mar 26, 2009 6:10am Mar 26, 2009 6:10am
Quoting gammase1
Good point.... But is that still a big a problem now as it was, say, this time last year? I would have thought not, seeing as the Chinese have reversed many of the policies put in place to counter the influx of "hot money", mainly through reducing banks' reserve requirements, in a bid to stimulate credit growth and the wider economy.
last year the chinese had no idea whatsoever what would happen, like anyone else , and they were crediting the entire economy and were very proud of the "overheating of the economy" and putting even more fuel into the fire thru subsidized loans, by july-august getting a loan was as easy as buying into the supermarket, etc ... you have now entire cities with new buildings unpopulated and things are really big out there. but to come to pegging thing , they cant afford it, at least now, those you hear are just some phony rhetoric, they just cant afford such things as economic independence. All the numbers you get from them are doctored, i mean ALL not just some.
  • #18
  • Mar 26, 2009 6:22am Mar 26, 2009 6:22am
Quoting arthurb
last year the chinese had no idea whatsoever what would happen, like anyone else , and they were crediting the entire economy and were very proud of the "overheating of the economy" and putting even more fuel into the fire thru subsidized loans, by july-august getting a loan was as easy as buying into the supermarket, etc ... you have now entire cities with new buildings unpopulated and things are really big out there. but to come to pegging thing , they cant afford it, at least now, those you hear are just some phony rhetoric, they just cant...
Thanks mate, I know from running a business out there, you are well versed on how things actually are on the ground.

I find the economic data they release just impossibe to reconcile against the backdrop of collapsing global demand, particularly when one compares China's recent alleged growth to that of other producing countries such as Germany and Japan, for example. Surely, the extra government spending cannot be taking up all of the slack. It makes litte sense to my simple mind.

It seems to me that this is all done for social cohesion, as citizens are more willing to accept a one-party state, and all the limitations that come with that system of governance, if there is the belief of ever-increasing prosperity.
  • #19
  • Mar 26, 2009 6:30am Mar 26, 2009 6:30am
Quoting arthurb
last year the chinese had no idea whatsoever what would happen, like anyone else , and they were crediting the entire economy and were very proud of the "overheating of the economy" and putting even more fuel into the fire thru subsidized loans, by july-august getting a loan was as easy as buying into the supermarket, etc ... you have now entire cities with new buildings unpopulated and things are really big out there. but to come to pegging thing , they cant afford it, at least now, those you hear are just some phony rhetoric, they just cant...
Btw... I wonder whether these forums will now shift from talking about the Amero to the Chinero or Chinarus.... hahahaha

It made me laugh that the Kazakh president, Nursultan Nazarbayev, came out and suggested the name of "Acmetal" for the proposed new reserve currency!! Thank you so much for your valuable input Mr Nazarbayev!! Where would we be without you?
  • #20
  • Mar 26, 2009 6:38am Mar 26, 2009 6:38am
Quoting gammase1
Btw... I wonder whether these forums will now shift from talking about the Amero to the Chinero or Chinarus.... hahahaha

It made me laugh that the Kazakh president, Nursultan Nazarbayev, came out and suggested the name of "Acmetal" for the proposed new reserve currency!! Thank you so much for your valuable input Mr Nazarbayev!! Where would we be without you?
wow, that's too ingenious, really.

Cinero, Chinarub , those are the ccy of the future.
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