Since China announced the wilder band of trading range of Yuan against Dollar, I think it will rise larger than market expected in the next few weeks, to show US and the world it prepares to resolve the trade issues, and this in turn will force Yen to rise, carry trade to unwind, and Dollar to fall further against major currencies.
- Dollar's fall will force the liquidity to leave US. That will put an end of US bull market run this year.
- And if the Yen unwinding is out of control in any way, that will have greater impact on world stock markets, specially these countries with higher rates, like US and Australia.
- So this is something that can be found out in the next few weeks to see if China is serious about the Yuan appreciation or not.
- And gold will benefit when Dollar falls out of it's current historic low support.
1 comments:
Unfortunately the Chinese gov't's decision to invest in Blackstone will probably outweigh neg. sentiment around Yuan, so it looks like another manic week. I'm thinking of throwing in the towel on DXD and redeploying in gold. The rationale is the same, with a bit less downside risk (I hope).
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