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Global Markets to Fed: No Rate Hike, Strong Dollar Is Killing Us

There are many reasons for global markets to melt down, but one that doesn’t get enough attention is the strong dollar. The USD has already strengthened by 20%. The damage delivered by the rising dollar has been severe; a move higher from here might prove fatal to emerging markets and faltering U.S. corporate profits.

Is China Quietly Targeting A 20% Yuan Devaluation?

Some Chinese agencies involved in economic affairs are assuming a much weaker yuan both over the near- and medium-term. Those projections, which suggest a depreciation of over 8% by Dec. 31 & about 20% by end of 2016, were adopted after the currency was devalued this month & compare with analysts’ forecasts for the yuan to reach 6.5 to the dollar by the end of this year.

The Dollar Will Not Be Overthrown in October (Part II)

The Fed’s talk about raising interest rates is making the dollar stronger, but it’s also making the yuan stronger due to the peg. China has to tighten its monetary policy by buying yuan & selling dollars to maintain the peg, at a time when China is slowing & should be easing, not tightening, policy. So finally, China threw in the towel and broke the peg to the dollar on August 11.

The Dollar Will Not Be Overthrown in October

Blogs, newsletters, and inboxes are cluttered with dire warnings about an event in October 2015. That will supposedly overthrow the dollar as the global reserve currency and cause a catastrophic meltdown of the international financial system. In fact, nothing of the kind is about to happen. There are important and significant events happening behind the scenes.

The Key to Understanding China's Devaluation Against the Dollar

By decoupling from the dollar now, China is sending a message that it may be prepared to let it fall later. This means that when the dollar starts to fall in earnest, China may not be there to catch it. This will also mean that the biggest foreign buyer of Treasury bonds will likely be unwilling to provide help when the U.S. needs China’s help the most.

China Destroys the “August is a Quiet Month Myth”

After a long period of pegging the Chinese yuan to the US dollar at about 6.1-to-1, China devalued the yuan in a sneak attack on August 11, devalued again Wednesday & Thursday. The total devaluation is almost 5%, the biggest devaluation in over 20 years. Normal daily volatility in foreign exchange markets is measured in 5 decimal places. 0.05% is a choppy day. 5.0% is an earthquake.

What China's Devaluation Means For The Future Of The Dollar

Nearly every government, commercial bank & central bank in the world holds US dollars in reserve as they are used as the primary currency in global trade. But this status is by no means written in stone. The US dollar is not the first global reserve currency, and it won’t be the last. It’s foolish to expect a reserve currency with such pitiful fundamentals as the US dollar to last forever.

Everyone Is Probably Wrong About The US Dollar

Could the current US dollar rally last a bit longer? Absolutely. However, it is unlikely to move substantially higher without a reasonable correction first. From a contrarian standpoint, with everybody on the long side of the trade, it may be time to take the opposing view. The good news is that a weaker dollar will play favorably for the beaten down commodity driven sectors.

Chinese Devaluation Extends To 3rd Day - Yuan Hits 4 Year Low

Having devalued the Yuan fix by 3.5% in the last 2 days, China did it again, shifting Yuan to 4 year lows. While confusion reigns over why PBOC would intervene at the close to strengthen the Yuan last night, the reality is the commitment isn’t to a devaluation for China’s exports, but its actions are directed toward trying to keep the wholesale finance interfaces somewhat orderly.

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. Case in point, at least three major emerging market nations announced they are bracing for a currency war.

After The Chinese Currency Devaluation, Who's Next?

On a broader level, the currency devaluation signals PBOC’s eagerness to join the global currency wars. With the competitive currency devaluation by various central banks gaining momentum but global trade slowing, the latest CNY devaluation could be seen as likely to force other central banks to consider similar measures before long.

Gold Soars After Chinese Currency Devaluation

Over one billion Chinese will soon be scrambling into gold to preserve their purchasing power after the PBOC’s dramatic devaluation announcement. Any day now the PBOC will update its revised foreign reserve and gold holdings. And so the next big leg up in gold will take place when it is revealed that the PBOC had only exposed a portion of its “new” total gold inventory.

Currency Devaluation Coming Soon To China

Keep your eye on the market & listen. The global trend in stock prices is still bullish. The market doesn’t yet see any reason to panic over these big picture forces that are playing out under the surface. We’re going through a mild correction but not enough to turn the market bearish. A Chinese currency devaluation might change that but it could still be a year or so away.

The Doomed Currency - Euro Is Not Dead

Based on the turmoil created by the European Debt Crisis, the continuing problems in Greece & other overly indebted southern tier European economies, many investors may have come to assume that Euro boosters will be forced to ultimately throw in the towel & call off the entire experiment, thereby leaving the Dollar completely unchallenged as the champion currency.

The War On Cash: Why Now? What Does It Mean?

A war on cash means, governments are limiting the use of cash & a variety of official-mouthpiece economists are calling for the outright abolition of cash. Authorities are restricting the amount of cash that can be withdrawn from banks & limiting what can be purchased with cash. Who ultimately benefits by this war on cash? Government & central banks – pure and simple.

Currency Devaluation: The Crushing Vice of Price

When stagnation grabs exporting nations by the throat, the universal solution offered is devalue your currency to boost exports. Currency Devaluation is a bonanza for exporters’ bottom lines, but has a negative consequence: The cost of imports skyrockets. When imports are essential, the benefits of devaluation may be considerably less than the pain caused by rising import costs.

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