Posts Tagged ‘commodities’

Forex Talk In The Street~Mr. Hu In The News!

All eyes, however, are upon the Renminbi/dollar trade and upon US/Sino relations as
Chinese President Hu is about to finish his state visit tothe US. Traders are fascinated by the statement made by
US Vice President Biden who said that “significant” discussions regarding the Renminbi/dollar have been
held in private with Mr. Hu’s “sherpas,” and Traders do not doubt but that is true. It is at the “Sherpa” level that all
such discussions are held and where the real decision making is done. Even so, Talk In The Street found it interesting that the Vice President made this known.

Turning to the economic data, China yesterday reported that its GDP in the 4th quarter of last year grew
at the rather heady pace of +9.8%. The Street have almost no confidence at all that this number is close to being
right, there is little confidence in the US, or Canada or England or Germany et al to get their GDP
figures right within a full percentage point, traders are even less confidence in Beijing getting its number right
within 2-3%! In other words, Chinese GDP could be as small as +6% or as robust as +13% and the street
would nod approvingly in either direction. All we know for certain is that China’s economy is strong; it is not
recessionary and we do not think that there is any “Bubble” worthy of fear on our part save perhaps for housing. Even then we are not nearly as fearful of problems there as we were of problems in our housing market in ’05 and ’06. Here in
the US our housing problems were caused by overt speculation on the part of the citizenry who willingly took
down preposterous levels of debt with which to make those speculations. When those
speculations soured, the citizens blamed the banks. In China, credit extension is far,
far less onerous.

Talk In The Street~November 15th

The dollar on the  FOREX MARKET as the new trading week begins is mixed, for it has risen proportional to some of its major and
its minor currency trading partners while it has fallen comparative to others. Try as we might, notwithstanding, we see
little in the way of consistency in how the dollar has reacted since the end of the G20 meetings, for it has fallen relative to the EUR and Sterling, but it has risen relative to the Swiss franc; in other words it knows not what to do relative to Europe generally. If there is one consistency it is that currencies that are “China related”‚Ķ that is currencies where there is more Chinese trade related interest than in others‚Ķ such as the Yen and the Aussie and Kiwi dollars‚Ķ have weakened the most relative to the US dollar; otherwise
incompatibility reigns.

Concerning the G20 meetings, the consensus is that the Presidency has suffered a series of defeats at the meetings, coming home with little that was on its agenda to accomplish. We’ll not debate too greatly with that judgement, for the US went to the meetings hoping
to come away with rather strict numeric rules regarding trade deficits, budget deficits and the like and hoping too to come home with some consensus amongst the attendees that China’s currency policies were wrong and needed to be accompanied too.
The US may not have wanted to have China named directly in the post-meeting communiqu√©, but it diindeed hope that there might be some talk of “undervaluation”of the YUAN  at the very least. It got nothing of the sort.

To that end then the meetings were a disappointment, and for President Obama, who only a year and one half ago reigned exultant, having been adorned with a newly granted Nobel Peace Prize, they were a embarrassment. Reality is a harsh mistress. From my perspective, however, these meetings are always overhyped and the best that one can accomplish is to know that the lines of communication are always made more open amongst the attending nations, and that’s all we got was lip service!
Euro $ projected Range 1.3500-1.3820

GBP$  1.6190 1.5850.