Over the past several decades, we have seen how China’s high economic growth and increasing economic integration with other countries have led to a dramatic increase in its clout in global output and trade.
If the worst of the market panic is behind us, it is worthwhile exercise to see what the charts are saying about the dollar. One advantage of technical analysis is that the fundamental causes and considerations behind the large moves need not be determined.
On October 9, the UK announced it was beginning the launch of a yuan-denominated bond, becoming the first sovereign, besides China, to do so. It is spurring talk that this is the death of the US dollar.
The US equity market was unable to sustain early gains yesterday and, although several Asian markets posted minor gains, Europe is seeing red again today. US equities are called lower as well. The European bond market rally continues, except for Greece, where the 10-year yield rose to about 70 bp over the past five sessions.
In a surprising move, the European Central Bank is considering buying Chinese yuan as a reserve currency.
According to a report by Bloomberg, anonymous sources in the ECB have said that the Governing Council of the bank will discuss the possibility during its meeting on October 15th. The decision will come amidst decelerating inflation in both Europe and Asia that has increased the risk of deflation in developed nations. A stronger dollar and falling commodity prices have placed the eurozone in a tricky situation in which their options for reserves are shrinking.
The US dollar is trading heavier against most of the major and emerging market currencies. The euro and sterling remain within the ranges seen before the weekend while dollar slipped to JPY107 in a Tokyo-less Asian session.
Last week was of two halves. The dollar correctly lower through midweek and then recovered. While the dollar’s losses were pared, it still managed to fall against nearly all the major currencies. However, it finished the week on a firm note, and although it appears poised to move higher in the week ahead, it is not immediately clear that new high is imminent.
Alibaba Group Holding the chinese e-commerce giant will sell $22 billion of shares on Thursday, finalizing a two week road show that pulled interest from world-wide investors and will likely be the world’s largest initial public offering.
Alibaba shares will be priced after the markets close at 4pm. Thursday and will trade on the New York Stock Exchange on Friday with the ticker “BABA.”
Sterling has been pounded by the YouGov poll that showed that those favoring Scottish independence have gained a slim majority for the first time. It does not matter than other polls have yet to confirm it. A “yes” vote was widely seen as a high impact event, though calling it a Black Swan probably does not do justice to the long planned event. The major parties in the UK are expected to announce a new devolution agreement for Scotland to entice the rejection of independence.
A major U.S.-based bank has abruptly ordered the closure of hundreds of accounts belonging to porn stars, triggering fury across the adult industry.
According to CNBC.com, Chase Bank, a subsidiary of U.S. financial giant JPMorgan Chase, began sending out notices to stars in the porn industry earlier this month, informing them that their bank accounts would be shut down by May 11.
