Posted on October 10, 2010
Rogue Economist submits:
Alright. This has been called an outright war, gentlemen. There is no more sense being coy about it, so let’s recognize the battlefield tactics for what they are. For it is clear that this currency war is not just a mere act of policy (you wish!), but a true global trade statement – a continuation of trade policy by other means (sorry Col. Clausewitz).
Developed country with trade deficit
Posted on October 10, 2010
Cliff Wachtel submits:
COMING WEEK
WILDCARDS
Posted on October 10, 2010
Soos Global Capital submits:
And the skittishness of markets was probably most evident on Tuesday when the market soared almost 200 points largely due to a slight uptick in Non-Manufacturing ISM data, an outsized move for a number that is not your usual market moving factoid! That market reaction led me to publish a giant "caveat emptor" within which I had the following graph (click to enlarge) that points out just how modest this up-move in Non-Mftg ISM was and therefore just how seemingly absurd was the market’s response to it!
Posted on October 10, 2010
Bruce Krasting submits:
Last Sunday night I wrote about the coming week:
If next Friday the Buck is lower across the board and the BoJ is a bit bloodied Ben Bernanke will light a cigar.
Posted on October 10, 2010
Clive Corcoran submits:
The following "initiative" from Mr. Geithner follows on from a theme articulated earlier in the week, in which the older and supposedly richer (in fact, the most indebted) economies are prepared to grant more power to the newer and less affluent (in fact, surplus economies with huge currency reserves and savings) economies in the G20, with respect to IMF voting rights.
WASHINGTON (MarketWatch) — The United States has linked a faster rise in China’s currency to a deal that would give the Asian country more sway at the International Monetary Fund. In a speech to the IMF’s governing council on Saturday, Treasury Secretary Timothy Geithner said any agreement to give emerging market economies more voting power at the IMF "needs to be accompanied with more progress by countries, particularly the surplus countries, towards more market-oriented exchange rate policies and policies that will reduce reliance on exports and strengthen domestic demand." The top Chinese representative at the IMF talks, Zhou Xiaochuan, the head of China’s central bank, has already rejected any link between the two issues. The U.S. has been seeking new levers to force China to let its currency rise.
Posted on October 10, 2010
Dian L. Chu submits:
Crude Oil hit a high of $84.09 on Thursday morning before investors sold into the rally in all commodities before the volatile jobs report on Friday morning. The shorts pushed Crude to a weekly low of $80.30 early Friday morning, which was a nice buying opportunity, as Crude Oil closed the electronic session on Friday at $82.84.
After the jobs report came in within expectations, there was substantial fund buying back in all the commodities across the board, with the thought that the still weak job market mandates the Fed to start the QE2 Program in a serious manner.
Posted on October 10, 2010
Econ Grapher submits:
This week we look at some of the monetary policy decisions during the past week (Australia, Indonesia, Japan, Europe, UK, Philippines). Then we review some interesting data points from the US; non-manufacturing PMI, consumer credit, and the nonfarm payrolls report. Then we finish up with a look at the strong employment numbers in Australia.
1. Monetary Policy Review
Among the central banks announcing monetary policy decisions last week, the Reserve Bank of Australia held its rate at 4.50%, the Central bank of Indonesia held at 6.50%, the Bank of Japan decreased from 0.10% to between 0 and 0.10%, Bangko Sentral Ng Pilipinas held at 4.00%, the European Central Bank held at 1.00%, and the Bank of England held at 0.50%. So all quiet really except for japan who also announced a 5 trillion yen quantitative easing program where it would buy bonds, REITs, and even shares in an attempt to ease further and stimulate the economy. The close call was Australia, which is likely to raise at their next meeting as the Australian economy goes from strength to strength (more on this later).
Posted on October 08, 2010
Tom Lydon submits:
Currency traders are having a hard time keeping up as an “international currency war” threatens to destabilize the currency status quo. Despite efforts to keep currencies low, some currency exchange traded funds may decline as currencies continue to appreciate.
Dr. Dominique Strauss-Kahn, managing director of the International Monetary Fund (IMF), stated “there is clearly the idea beginning to circulate that currencies can be used as a policy weapon,” reports Julia Kollewe for The Sydney Morning Herald. “Such an idea would represent a very serious risk to the global recovery. Any such approach would have a negative and very damaging longer-run impact,” Dr. Strauss-Kahn adds.
Posted on October 08, 2010
Edward Harrison submits:
Morgan Stanley has an interesting piece out today, arguing there is no ‘currency war’… yet. Win Thin made some points on this score yesterday, pointing to real effective exchange rates in developing countries. Morgan Stanley’s Manoj Pradhan has a different take, citing the lack of emerging market retaliation (see Global Monetary Analyst: QE2, March 4, 2009):
Brazil’s Finance Minister, Guido Mantega, recently sparked a lively discussion by saying that an ‘international currency war’ has broken out. Most EM currencies have been appreciating throughout 2010…
Posted on October 08, 2010
Matthew Bradbard submits:
There are too many equity, metal bulls and dollar bears to see a continuation of the recent move… only my opinion. We are still operating under the influence that Crude oil prices are moving higher but we reserve the right to change our mind on a settlement above $84 in the November contract. We’re suggesting clients remain on the sidelines, but if forced into the market we think a $5-7 move lower will come before a $5-7 move higher. The action in natural gas convinced me to hang on with clients today, but as we’ve stated of late, positions are mixed between November and December and time is not on our side. We do expect a 10% squeeze but from what level?
It appears we will have a strong finish to the week in indices, but on a disappointing jobs number… go figure. We remain short with clients in November ES puts. Perhaps a light trading week will get prices back in line next week, which would mean a lower trade.
