Best of the Week
Most Popular
1. TESLA! Cathy Wood ARK Funds Bubble BURSTS! - 12th May 21
2.Stock Market Entering Early Summer Correction Trend Forecast - 10th May 21
3.GOLD GDX, HUI Stocks - Will Paradise Turn into a Dystopia? - 11th May 21
4.Crypto Bubble Bursts! Nicehash Suspends Coinbase Withdrawals, Bitcoin, Ethereum Bear Market Begins - 16th May 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.Cathy Wood Ark Invest Funds Bubble BURSTS! ARKK, ARKG, Tesla Entering Severe Bear Market - 13th May 21
7.Stock Market - Should You Be In Cash Right Now? - 17th May 21
8.Gold to Benefit from Mounting US Debt Pile - 14th May 21
9.Coronavius Covid-19 in Italy in August 2019! - 13th May 21
10.How to Invest in HIGH RISK Tech Stocks for 2021 and Beyond - Part 2 of 2 - 18th May 21
Last 7 days
Evergrande China's Lehman's Moment, Tip of the Ice Berg in Financial Crisis 2.0 - 21st Sep 21
The Fed Is Playing The Biggest Game Of Chicken In History - 21st Sep 21
Focus on Stock Market Short-term Cycle - 21st Sep 21
Lands End Cornwall In VR360 - UK Holidays, Staycations - 21st Sep 21
Stock Market FOMO Hits September CRASH Brick Wall - Dow Trend Forecast 2021 Review - 20th Sep 21
Two Huge, Overlooked Drains on Global Silver Supplies - 20th Sep 21
Gold gets hammered but Copper fails to seize the moment - 20th Sep 21
New arms race and nuclear risks could spell End to the Asian Century - 20th Sep 21
Stock Market FOMO Hits September Brick Wall - Dow Trend Forecast 2021 Review - 19th Sep 21
Dow Forecasting Neural Nets, Crossing the Rubicon With Three High Risk Chinese Tech Stocks - 18th Sep 21
If Post-1971 Monetary System Is Bad, Why Isn’t Gold Higher? - 18th Sep 21
Stock Market Shaking Off the Taper Blues - 18th Sep 21
So... This Happened! One Crypto Goes From "Little-Known" -to- "Top 10" in 6 Weeks - 18th Sep 21
Why a Financial Markets "Panic" May Be Just Around the Corner - 18th Sep 21
An Update on the End of College… and a New Way to Profit - 16th Sep 21
What Kind of Support and Services Can Your Accountant Provide? Your Main Questions Answered - 16th Sep 21
Consistent performance makes waste a good place to buy stocks - 16th Sep 21
Dow Stock Market Trend Forecasting Neural Nets Pattern Recognition - 15th Sep 21
Eurozone Impact on Gold: The ECB and the Phantom Taper - 15th Sep 21
Fed To Taper into Weakening Economy - 15th Sep 21
Gold Miners: Last of the Summer Wine - 15th Sep 21
How does product development affect a company’s market value? - 15th Sep 21
Types of Investment Property to Become Familiar with - 15th Sep 21
Is This the "Kiss of Death" for the Stocks Bull Market? - 14th Sep 21
Where Are the Stock Market Fireworks? - 14th Sep 21
Play-To-Earn Cryptocurrency Games Gain More and Is Set to Expand - 14th Sep 21
The CashFX TAP Platform - Catering to Bull Investors and Bear Investors Alike - 14th Sep 21
Why every serious investor should be focused on blockchain technology - 13th Sep 21
SPX Base Projection Reached – End of the Line? - 13th Sep 21
There are diverse ways to finance the purchase of a car - 13th Sep 21
6 Tips For Wise Investment - 13th Sep 21 - Mark_Adan
Gold Price Back Below $1,800! - 10th Sep 21
The Inflation/Deflation debate wears on… - 10th Sep 21
Silver Price seen tracking Copper prices higher - 10th Sep 21
The Pitfalls of Not Using a Solicitor for Your Divorce - 10th Sep 21
Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
This Boom-Bust Cycle in US Home Ownership Should Give Home Shoppers Pause - 9th Sep 21
Stock Market September Smackdown Coming Next? - 9th Sep 21 - Monica_Kingsley
Crazy Crypto Markets How to Buy Bitcoin, Litecoin for Half Market Price and Sell for TRIPLE! - 8th Sep 21
Sun Sea and Sand UK Holidays 2021, Scarborough in VR 180 3D! - 8th Sep 21
Bitcoin BTC Price Detailed Trend Forecast Into End 2021 - 8th Sep 21
Hyper Growth Stocks - This billionaire is now using one of our top strategies - 8th Sep 21
6 common trading mistakes to avoid at all costs - 8th Sep 21
US Dollar Upswing, S&P 500 and Nasdaq Outlook - 7th Sep 21
Dovish Assassins of the USD Index - 7th Sep 21
Weak August Payrolls: Why We Should Care - 7th Sep 21
A Mixed Stock Market - Still - 6th Sep 21
Energy Metals Build Momentum; Silver & Platinum May Follow - 6th Sep 21
What‘s Not to Love About Crypto Market Fireworks - 6th Sep 21
Surging US Home Prices and Gold – What’s the Link? - 6th Sep 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

China Slams US Dollar; Yen Looks Great!

Currencies / US Dollar Nov 09, 2007 - 11:07 AM GMT

By: Money_and_Markets

Currencies

Best Financial Markets Analysis ArticleJack Crooks writes:China is getting very good at controlling currency values, and not just their own. While it's no secret they've been artificially suppressing the value of the Chinese yuan, they're now pushing down the value of the U.S. dollar, too!

The implications for the currency markets are huge. Most importantly, this development propelled the yen much higher, and I expect the momentum to continue building. Here's the scoop ...


Chinese Officials Slam the Dollar's Position as the World's Reserve Currency

Just two days ago, Cheng Siwei, vice-chair of China's National People's Congress said his country should readjust its foreign exchange reserves to favor currencies that aren't falling off a cliff. With the buck losing value on a daily basis, it's obvious why China needs to take a more prudent approach to their $1.43 trillion in reserves.

Cheng Siwei — "We will favor stronger currencies over weaker ones, and will readjust accordingly."

But the Beijing officials didn't stop there. Xu Jian, a vice director of the country's central bank pointed to the end of the U.S. dollar as the world's reserve currency!

Unfortunately for the buck, these comments didn't come from a couple of low-ranking public servants. They came from two Beijing bigwigs with $1.4 trillion behind them.

There's no telling exactly where China will reallocate its reserves or to what degree. What is clear, however, is that the Chinese will be dumping dollars. And I think one likely way they'll do that is by using sovereign wealth funds, the foreign investment companies I recently told you about .

Specifically, I think one fund managed by China Investment Corp. could be given the green light to direct excess reserves into better performing investments. That could send the dollar down and other major currencies to new, multi-year highs.

Xu Jian — "[The U.S. dollar] is losing its status as the world currency."

And if massive sovereign wealth funds from other countries pile on? Look out!

Now don't get me wrong, I'm not predicting the permanent demise of the dollar. It will eventually get the chance to reassert itself atop the currency food chain. But that's not going to happen anytime soon, which is why ...

You Should Take This Great Opportunity To Profit As Other Currencies Strengthen!

The dollar is falling behind other world currencies because of the Fed's accommodative monetary policy. Bernanke and company are busy LOWERING rates to help bail out Wall Street, while other central banks are either maintaining their current rates or RAISING them!

Real world example: The Reserve Bank of Australia boosted their benchmark lending rate from 6.5% to 6.75% earlier this week, further increasing the yield advantage of the Australian dollar over the U.S. dollar.

And look, even if a country's central bank leaves rates unchanged, their currencies are still gaining a yield advantage over the dollar every time the Federal Reserve slashes the fed funds rate.

That means the euro, the Australian dollar, the Canadian dollar, the Swiss franc, the New Zealand dollar and even the British pound will look more and more appealing to global investors seeking higher yields. Make the right moves and you can reap major profits ...

My Favorite Long-Term Currency Play Remains the Japanese Yen

For weeks, I've been telling you that the Japanese yen is primed for a major rally. Now, it looks like China has stirred the pot enough to get things moving!

Right after the Chinese dished out their anti-dollar commentary, the yen staged a massive rally and challenged recent highs. Take a look at my chart of the yen futures, and you'll see what I mean.

In technical terms, the chart shows a clear breakout of a downward trending channel. This kind of move typically signals that a new, massive wave of buying momentum is about to begin.

I consider it especially significant because in past episodes of dollar weakness, the yen didn't move a whole lot. Rather, it rallied during times of increased risk aversion, as investors tried to cover borrowed Japanese money. This week was a whole different story, and that indicates a major shift in the markets.

Plus, I see a fundamental reason for another major move in the yen: I expect China will begin allowing its yuan to rise much more quickly to help fight inflation.

In turn, Japan will feel less pressure to keep the value of the yen low, and it will likely hike interest rates!

See, right now, the Japanese have to suppress the value of the yen so they can stay competitive with China's exports. But they're ready to hike as soon as they can.

In fact, less than a week ago, Bank of Japan governor Toshihiko Fukui expressed the need for a timely interest rate hike, saying keeping rates too low was risky.

Sure, the Bank of Japan's official lending rate is far below the fed funds rate. But the BOJ policy is heading in the right direction ... the same can't be said for the Fed!

Bottom line: The yen really came to life this week and I sure as heck think there's more upside ahead.

That's great news for my World Currency Options Alert subscribers, who are sitting in the sweet spot, just waiting for the yen's next explosion higher. So hang on to your hats because this is getting very interesting!

Best wishes,

Jack

This investment news is brought to you by Money and Markets . Money and Markets is a free daily investment newsletter from Martin D. Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Dr. Weiss is a leader in the fields of investing, interest rates, financial safety and economic forecasting. To view archives or subscribe, visit http://www.moneyandmarkets.com .

Money and Markets Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in