The Yuan Appreciates, the Fed Thinks This is Good

There are two proverbs I’d like to invoke for this article.  The first is:

Be careful what you wish for, you just might get it.

The second one is:

May you live in interesting times.

Both are apropos to what I’m seeing right now on Monday evening as I type this.  The USD/CNY cross has dropped below the $6.29 level and that is a recovery as the USD/CNY cross fell off a cliff after the Dallas Fed print this morning.  the Yuan traded as low as 6.278 to the U.S. Dollar (AMEX:UUP) before things really went wild, where the price was pushed up and down between that level and 6.31 on three separate occasions during New York trading.

The Fed has been trying to engineer a cheaper dollar, primarily against the Yuan (AMEX:DSUM), constantly complaining for the Yuan to be allowed to appreciate versus the dollar, which it has, just not at the pace the Americans wish, i.e. in such a way as to allow them to trash the Chinese currency whenever the mood strikes them.

Now they are getting what they want, the Dollar falling, hoping in all of their addled-brained, foggy-headed Keynesian amniotic sac of fraudulent models and inhumane ideology that this will goose U.S. exports enough to jump start an economy that is hollowing itself out from within precisely because of these same policies.

So, now that the Dollar has broken down technically on its way to 76 and then 72 on the USDX, which frankly means very little in the end, the true rise of the Yuan as a major player on the world financial stage is being set and it’s being done skillfully by those who, I believe, are tired of being run by the money masters in New York and London.

May you live in interesting times, indeed.

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Tom Luongo

About Tom Luongo

Tom Luongo is a professional chemist and self-taught economist who has been following and trading stocks for nearly 12 years. He has no formal ties to the financial industry and considers that an asset in his analysis of the interplay between monetary policy and capital markets.

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