EURUSD

It's sitting right on the top Trend line whole day long.

Good luck on that... Gold going to run to break that $1225 neck soon IMHO.

be careful. zar close to support.

what is zar?

waiting to see if macd divergence manifests on 4hr chart...
if so, possible to visit the 200 ema around 1.4
which is just short of a 50 fib from swing high 1/13

South African rand currency

zar= s africa rand = gold

so when you said it is close to support, does it mean that it should help gold go higher from here?

not really saying nothing. but zar being near support, if support holds. will have an inverse result in gold. it could weigh on gold. but once support is broken it should help gold push higher. zar is near a crossroad

In my yearend projections for 2010 I said (among other things) the following:

-China will surprise us all and revalue the Yuan by 10%. The currency will still be undervalued.


On Monday morning Bloomberg has a story out quoting Goldman’s Chief European Economist as saying:

Feb. 15 (Bloomberg) -- Goldman Sachs Group Inc. Chief Economist Jim O’Neilll said China may be poised to let its currency strengthen as much as 5 percent to slow the world’s fastest growing major economy.

I doubt that Mr. O’Neill is making a guess here. I think he may have some real insight on this. When he says this, I listen:

“I have a strong opinion that they’re close to moving the exchange rate,”

Say this story is true and in the not too distant future China will adjust its currency against the dollar by a reasonably significant amount. Assume that they move by 5%. What might this mean in the scheme of things? What are the market implications, if any? Just some thoughts.

-If China does do something significant, it is another sign that should not be avoided. Something is up with China. They are changing direction. A currency move this week followed by the monetary moves last week is a clear indication that things have heated up, and they don’t like it. The two steps (assumes currency reval.) would prove that Chanos etal. were right all along. There is a bubble.

-If you were China Inc. and you owned the IOU’s behind a monster amount of empty buildings (and cities) the last thing you would do is to strengthen your currency and tighten monetary policy. But if the arguments in favor of reversing stimulus outweigh the consequences of extending fast money policies then it is not hard to predict that those empty buildings will remain so for a while to come. There would appear to be some urgency to the Chinese steps, should they occur.

-Should this happen it would come at a very inconvenient time. China’s currency is tied to the dollar. The dollar his risen against the Euro by 10% in the last two months. Therefore China’s currency has risen by the same amount against the Euro Zone. That is a big market for China’s exports. If they revalue against the dollar by 5% and the dollar stays where it is they will have taken a 15% hit on the terms of trade in just 60 days. If I were China I would be putting out the story, “Our currency is up 10% versus half the world. Stop yapping at us to make it higher still”. So that makes the timing of this (should GS be correct) very suspicious in my mind.

-All else being equal I would rate this a win-win for the Euro Zone and Brazil (again), a win-lose for the USA and a lose-lose for China. For the US it might be of some benefit to the big exporters, but I doubt it. Any improvement on pricing will be offset by a reduction in demand. For all of those Wal-Mart and Home Depot shoppers beware. Prices are going up.

The market outlook on this is murky for me. There are some checks and balances to this that could in theory bring some stability. Everyone has been leaning on the Chinese to hike their currency. So if they were to do it the spin would be, “Hey! Here’s some Good News!” I don’t see it that way.

-Last week the market tanked on the news that China was moving on reserves. This is no different. So if it was bad last week. It will be bad this week too.

-Should this happen it raises a big question about the HK dollar. Logically that would have to be re-pegged as well. Should that not take place I would expect a mega move into the HK$. I can’t imagine that the Central Bank will accommodate that.

The money flow to Hong Kong has been big and steady for some time. The reserves were $206B as of 12/31/2009. Should there be an adjustment in the HK$ rate there would be some very big overnight profits. At some point thereafter the reserve flow would reverse to more normal levels. Say 50% or $100b. That just means there is one less buyer of US Treasury bills at the next auction. Most of the hot money that went to HK was borrowed, so when the short-term flows are reversed the margin debt is paid down. There is no new or alternate buyer of those Tbills.

-China was supposed be a global engine for growth. Whatever your expectations were on that score a week ago you must revise them down today. A year ago there was all the talk of green shoots. There were many of them. China tightening its belt at this time and at this pace is a brown patch. In Europe there are dead tumbleweeds blowing around. These things do not make for an improving growth story.

-Using the wisdom of purchasing power parity an argument could be made that the Euro would be a tad undervalued should the Chinese move. I don’t see that happening either. Much to the chagrin of the Chinese the dollar could go right on rising. To hell with purchasing power parity.

-If you read the Chinese steps as deflationary, it has to be bearish for the commodities. They have all been backing up. This could cause that to continue.

-Gold could be interesting. Say the thoughts on the dollar were right and we move toward 1.30. Say the commodity markets followed that lead. That would imply that gold should move lower in sympathy. I would watch that one. These things that may be coming are on the side of the shelf that is marked: DESTABILIZING. I am not sure if this will come into the gold equation at this time. It will soon enough.

-In this environment the TLT is not the place to be. Not yet.

-On paper this could mean that China has less exports and more imports. Should that be the case their reserves will stop growing. Who is it that is going to be buying all of the paper that is being created by all of the debtors in 2010? At the moment I am having trouble of thinking of any ‘size’ buyers. Possibly Ben B will have to add some more demand to meet the supply. That would be very big tumbleweed.

The GS report got me to write these thoughts. This all just blue-sky thinking. Probably nothing will come of it. I hope not. (source zerohedge.com)

my gold charts have been stuck at 1100.54 for over an hour now, wtf is going on

A very likely scenario. 1.3200 is being thrown around now.

I think if Chinese exports decline, then we won't be sending them as much dollars to recycle into Treasuries, i.e. they stay here in the hands of American consumers. Of course, if American consumers use those dollars to buy Mexican crap or Bangladeshi crap instead of Chinese crap, then the Mexicans/Bangledeshi will have more dollar reserves, i.e. the dollars that would go into Chinese reserves get moved to Mexico/Bangladesh reserves.

goldmen has been wrong before. but if this is correct it will reduce u.s. unemployment. this will help u.s. and euro longer term if euro survives. china has been a bubble it has a 5x5 area of office space for every man.women or child in china. already built. with much more in the process of being built. there building cities in the dessert on speculation with nobody to move in yet. because its built for upper class. the poor cant afford. unemployment going up... yada yada.. rule of 72 cant support this bubble.. PoP.. eu going lower is a blessing for eu... if this goldmen news is correct there goes commodities.. ... i believe if or not goldmen news is correct this would happen anyway.. but if china repegs money this will speed up the process.. goldmen is late with this.. its been talked about for at least 6 months pryer.. when they said eu was going up as late as dec.

mule that shit fast dont shit long.

good morning again gentlemen, I see it was a slow night last night. I got stopped out on one of my GU shorts but all EU's are still runnning...waiting on a break of 3500 to see if I'll hold or close all and wait for a bounce back up to 3650-3580zone

Does anyone here know anything about usdbot... is it worth the trial?

Why would you ask that question on the EURUSD thread?

Isn't ready to let go of 3600. I will continue to scalp around that number.

yea so is mine

gatorinla u r very beautiful would u like to marry me