Commodity Trade Mantra

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China Plans To Launch Renminbi Gold Fix By End of 2015

If the renminbi / yuan gold fix takes off, China could compel local buyers & foreign suppliers to pay the domestic renminbi price, making the London gold fix less relevant in the world’s biggest bullion market. China feels it is entitled to be a price-setter for bullion at a time when the global benchmark, the London fix, is under scrutiny for alleged price-manipulation.

China’s Gold Hoard Will Slay the Mighty Dollar — Here’s Why

China is soon going to want to disclose its gold holdings in an effort to have the yuan join the IMF’s currency basket – the SDR, currently having only the dollar, euro, yen & British pound. If China’s gold reserve is revealed this year and the size of the addition surprises to the upside, it is going to be a major shot across the bow of the U.S. dollar.

Gold Replacing the US Dollar as Reserve Asset

Fiat currencies are dying. Central banks will not actively back their currencies with gold but gold will replace foreign currency reserves. Many of the high debt countries like e.g. Greece, which look bad in today’s fiat currency context, will actually fare well in this transition of gold taking over the reserve asset status from fiat currency.

The Strong Dollar Could Turn on a Dime

Right now capital is flowing into the United States, away from these other countries, partly because the expectation of stronger growth and stronger rates. That’s why the dollar is stronger today. But will US rates actually go up in 2015? If no, and I believe it is so, then the current strong dollar trend could turn violently on a dime.

Is the US Dollar Rally Nearing Its End?

Past dollar rallies of this type have mostly seen a dollar appreciation of around 20% & lasted from under a year, meaning the current rally is already extended. Also, disappointing U.S. economic data is mounting and being largely ignored. Valuations suggest that the U.S. dollar may now be the world’s most overvalued currency.

Will Gold Win Out Against the US Dollar?

Gold is money, the best store of wealth millennia of human experience have devised, and more and more people are recognizing this. Pretty much everywhere but in the US, gold is up, not down. Of course, there’s a good chance that there’ll be more sell-offs before the gold bull resumes its charge… but they should be regarded as opportunities.

Trading the Parabolic Dollar

The US dollar has been rocketing higher on the incredible divergence of major central-bank policies. While the Fed’s first rate-hike in 9 years looms, ECB has started aggressively monetizing sovereign debt first time ever. Resulting yield differential has catapulted the USD parabolic, portending a major reversal & fantastic trading opportunity.

Why It Matters If the Dollar Is the Reserve Currency

The causes of threat to the US dollar as a reserve currency are the policies of the Fed itself. There is no conspiracy to attack the dollar by other countries. A loss of demand for holding the US dollar as a reserve currency would mean that trillions of dollars held overseas could flow back into the US, causing either inflation, recession, or both.

European Debt Crisis

A revolt against previously-agreed austerity packages by any of these other states would have untold ramifications not only for the future of the Eurozone, but the euro itself. In the wake of this episode, the status of the euro as money is likely to be increasingly questioned, not just in the foreign exchanges, but by its users as well.

Will China's Currency Peg Be the Next to Fall?

A pegged currency rises & falls against other currencies along with the underlying currency. As the dollar weakened from 2010 to mid-2014, China’s Renminbi weakened along with it. Now that the USD has gained 16% in less than a year, that’s dragging the RMB / Yuan higher with it, making China’s goods less competitive outside the US.

Reasons Why Trading Currencies Is Now The Most Difficult Since Lehman

Feel like trading FX has become next to impossible, with massive, gaping bid-ask spreads, strange “tractor beams” at key technical point in major pairs, completely unexpected stop loss runs & central banks behind every corner? Don’t worry you are not alone. It hasn’t been this difficult to trade currencies since the collapse of Lehman Brothers.

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