Posted on 08/12/2015 4:15:35 AM PDT by expat_panama
The dollar fell 0.6 percent against a basket of currencies on Wednesday, coming under pressure as Treasury yields dropped on doubts over whether the U.S Federal Reserve will raise interest rates in the wake of China's devaluation of the yuan.
The yuan extended its losses, dragging the growth-linked Australian and New Zealand dollars to six-year lows with it, while another set of disappointing Chinese data bolstered safe-haven currencies such as the yen.
The euro, meanwhile, rose, helped by the unwinding of euro-funded carry trades in the yuan EURCNH=. The single currency hit a one-month high of $1.11385 EUR=EBS, up 0.8 percent on the day. The dollar index fell to 96.691 .DXY, while the greenback shed 0.5 percent to trade at 124.42 yen JPY=.
"There are some question marks being raised about the timing of the Fed hike," said Niels Christensen, FX strategist at Nordea. "The euro is squeezing higher against the dollar, as Treasury yields drop."
In China, the spot yuan fell to 6.44 per dollar, its weakest since August 2011, after the central bank set its daily mid-point reference at 6.3306, even weaker than Tuesday's devaluation. The currency fared worse in international trade, touching 6.5888 yuan per dollar, its lowest since early 2011 CNH=.
Foreign exchange traders in Shanghai said Chinese state-owned banks were selling dollars on behalf of the central bank, which was intervening to keep the yuan CNY=CFXS around 6.43 against the dollar.
The latest PBOC moves came after it surprised markets on Tuesday by aggressively lowering its guidance rate, pushing the yuan down nearly 2 percent.
The Aussie, widely considered a more liquid proxy for China plays, AUD=D4 was trading flat at $0.7297, after plunging as low as $0.7217, its lowest since mid-2009. The New Zealand dollar also fell ...
(Excerpt) Read more at reuters.com ...
The dollar's soaring with the Yuan, falling w/ the euro, and as far as U.S. trade rates in general go this is been happening too fast for the bean counters to be able to say. Meanwhile we got a Fed-hike-no-matter-what coming next month to really speed things up...
The Fed aren’t going to hike rates in any meaningful sense, though they may opt for a notional 25 basis point hike as a one-time thing.
Instead there will be another QE.
To paraphrase Peter Schiff: we are going to have as many QEs as Rocky movies, and (just like the Rocky movies) each one will be worse than the last.
Excellent quote
This Is Not A Drill: India, Russia And Thailand Prepare For Currency War
When China sneezes, the world catches a cold. Alternatively, when China devalues, the rest of the (exporting) world scrambles to not be the last (exporting) nation standing, and to do so next, before everyone else does. We give Russia, Thailand and India (as well as the rest of the EM countries, actually make that all countries, the US included) at least a few days (hours may suffice) before they all realize that in a beggar-thy-neighbor global currency war, where the ZIRP (or NIRP) liquidity trap is already stalking at least half of the entire world, there really is no choice. http://www.zerohedge.com/news/2015-08-11/not-drill-india-russia-and-thailand-prepare-currency-war
Neat --lot's of exciting adventure today for the whole family! After yesterday's percent-plus stock index plunge in rising volume's added another distribution day (S&P count now to 8) while metals claw back up to the high end of their new ranges. Reports:
7:00 AM MBA Mortgage Index
10:00 AM JOLTS - Job Openings
10:30 AM Crude Inventories
2:00 PM Treasury Budget
Curiouser and curiouser headlines:
Just China’s way of saying “may you live in interesting times”.
Also Vietnam
Lol!
Interesting times coming to you, live and direct,
Tune in between 15-28 September!
Get your popcorn ready
If you want to keep your QE, you can keep your QE.
Trump’s plan is to the left of GW Bush’s. His cap gains rate is 50% higher. It’s a button-pusher plan, but I do like Rand’s proposal to shift to a consumption tax.
This line from your posted article is funny: safe-haven currencies such as the yen.
That kind of hike would be "meaningful" enough to the business community that by the time it got "meaningful" for y'all another hike wouldn't matter. Meanwhile that goofy Sept. hike would be leaving the survivors asking why?!
there will be another QE
Of course there will be --er, QE headlines that is. No matter what, our fruitloops press will continue its nonsense about bailout/QE and how it's been the cause of all of our 'run-away-inflation' we've been having and then our FR colleagues will just lap it up like kittens.
--and it stinks. He says that cutting corp taxes will be like almost stopping part of "a 35% tariff" equivalent, but to replace it with his "import tax of at least 20% on foreign goods" along with the 20% levied by other nations in retaliation we'd end up far worse off. Ah. He also endorses a worldwide system of taxation
I do love the way he sticks it to the press while running for office. Let's just hope he continues forever sticking it to the press while running for office.
That kind of hike would be "meaningful" enough to the business community that by the time we got around to one "meaningful" for y'all any other hikes wouldn't matter. Meanwhile a goofy Sept. hike would be leaving the survivors asking why?!
there will be another QE
Of course there will be --er, QE headlines that is. No matter what, our fruitloops press will continue its nonsense about all the bailout/QE that's been the cause of all of our 'run-away-inflation' we've been having and our FR colleagues will just lap it up like kittens.
But no actual rate hikes. Why is that?
Ah but of course, we're 'on the cusp' of a rate hike.
Thinking they will not raise in Sept.
The good that Trump’s done in moving some issues forward is neutralized by all the bad he does. He’s not a serious candidate and is a stalking horse for Hillary!
BTW, I believe his ‘worldwide taxation’ scheme is meant to stop the current regime we have and allow corporations to be taxed country by country, but perhaps I misunderstand him which seems to be his intent in every pronouncement.
I think they will not raise. After all - as this article shows - they’re already doing the groundwork for blaming China.
--and we'll be staying there for the foreseeable future....
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