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The End Of The Dollar Carry Trade? Presenting The Dollar Short Panic In A Burning Theater
After it became fashionable to say one was short the dollar at cocktail parties, the net result was a surge in CFTC-reported spec USD gross short positions and a plunge in net USD exposure. And since options traders are nothing but momentum chasing lemmings the theater is now fully on fire. Granted, while some of the recent spike in short interest has been covered, there are still just over a whopping 7.5k contract shorts that need to be covered before a reversion to the recent trendline. This is why we are currently seeing a massive unwind in the dollar short carry trade, and why once again rumors that macro funds are slowly and quietly receiving billions in margin calls behind the scenes.
Source: CFTC Commitment of Traders report
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Not for nothing, but the JPY is killing the AUD, doing big chart damage. Evertything else to follow, PM's especially. Good source of capital and overbought. Gold 1372 headed for 1340 quickly.
Just though I'd throw a reply in here before you could revise...
"Oh snap!"
"Booyakasha"
+1
This is the same guy that said last Friday:
by TWORIVER on Fri, 11/19/2010 - 09:50 #740876
Gold (1345) silver (26.5) and Oil (81.5) are all going to tank very hard today. Let the junkings begin!
Gold closed at 1354 on Friday. Some tanking!!
keep the faith - we need someone to sell...
By "quickly", do you mean "never"?
When this sucker gets up to 88 you're going see some serious shit.
BTF fans, UNITE!
Tyler, what intrigues me though, is this is not really resulting in any real material $$$ strength.
No of course theres no real $ strength, just the perception its the least crap covered currency compared to the implosion of others, Euro cant even get a bid.
Contrary to many pundit predictions....
The U.S. Dollar is now the primier, AAA-rated, gilt-edged currency on the globe.
Bernanke, Geithner, LLP is now free to print additional trillions with zero consequences.
With foreign stocks and currencies getting decimated, Peter Schiff must be puking up blood.
That's the best chart you've put up all day Robo. :)
What is that avatar supposed to be...looks like a burning vagina!
You've been on this board a bit longer than me and you ask this now?
http://www.google.com/images?hl=en&q=eye%20of%20sauron&um=1&ie=UTF-8&source=og&sa=N&tab=wi&biw=1419&bih=703
Anyone short the equity market should be happy to see this chart. I'm making good money, at last, on my dollar longs.
PS- a rebound in the dollar does not = a rebound for US Equity markets or the US in general. I keep having to tell people, get out the script from the Great Crash... everything else you try to compare this market environment to is WORTHLESS.
http://www.youtube.com/watch?v=1yqVD0swvWU
Here's your answer (@1:30) curby
On a day where the FED hits a milestone in Treasuries, Korea and Ireland take center stage to drive people into Tbills... Interesting..
Yea, what a difference 2 wks makes.
Last Friday you stated stocks were "telegraphing" no troubles around the corner...you are as fake as a $3 bill Robo.
time for a snap back rally. "we are an island of stability" amazingly.
Post a gold chart and then tell us what Peter Schiff is puking up.
The profile of UUP:
The futures contract is designed to replicate the performance of being long the US Dollar against the Euro, Japanese Yen, British Pound, Canadian Dollar, Swedish Krona and Swiss Franc.
In other words - it's bullish on the dollar vs. other fiat currencies.
Big Fat Hairy Deal.
How bullish are people on the dollar vs. other things?:
http://www.kitco.com/charts/popup/au3650nyb.html
Not so much, it appears.
Who's puking blood today? The silver call writers. $27.55 or so for the OPEX close.
YOU must be puking up blood, go buy some more LULU ya damn punk.
SheepDog-One, i'm loving the venom. awesome! :)
Easy sheep, don't take it so personal. Robo made it clear he is living on the market, so he is like the gambler at the casino who is mind fucking himself into believing he can actually win. Patience my friend is all you need, there is no way the dollar will hold up once inflation gets out of hand. Just remember one thing... Now that the FED is monetizing our debt, were done. It's a true sign of failed economics, the last ditch effort to cover their incompetence. They are on borrowed time and in the end we are all going to suffer for the Keynesian ignorance these so called leaders have portrayed. We would have been done along time ago if it wasn't for their stupidity and their ability to print. So just sit back and wait for it to unravel because when it starts, it is going to roll really fast and Robo will not even have time to react.
"Patience my friend is all you need, there is no way the dollar will hold up once inflation gets out of hand."
And who says inflation is going to get out of hand...IF THE DOLLAR STAYS UP??? This is exactly what I HAVE BEEN CALLING FOR. A rebound in the US when everyone else starts realizing the rest of the world is FUCKED a whole lot more than the US. You see, everyone is connected to US...so the more we hurt...the bigger they bleed. They will run out of blood long before we do. Continuation of ASSET deflation.....with little long term inflation, as the recent price spikes revert back to the norm....as commodities once again get crushed on the strong dollar play. INFLATION IS ONLY MEASURABLE OVER THE LONG TERM AS SUSTAINABLE PRICE HIKES. Price spikes are just that.....and markets correct.
Amen Brother Curb! Europe, Japan and EMs are much more hosed that the US. USD strength is here for a while as the equity and commodity markets burn.
BOTH the Federal Reserve Note AND gold can do well, until government attempts to intervene. I still like gold vs. the paper stuff, myself, 'curbyourrisk'.
Question:
When the Titanic sunk, which passengers were better off:
A. Those that climed to the top of a smokestack
B. Those that climed into a lifeboat
?
A perfect world, US needs to sell a Gazillion fresh green backs, and the whole fecking planet needs to buy them...
So, Bernanke is able to monetize the debt, flood the world with dollars and yet maintain dollar strength relative to other fiats, thus being the last to collapse? Sounds like a win for the Fed.
agreed. yen first, then euro, then dollar (and all the others in short order). last ones standing: PMs.
Yen is up today. Yen is more resiliant than you think. Long FXY.
i hear ya. i saw that. but everytime the Yen rises its another nail in the coffin for the Japanese economy. Now consider the fact that they have a debt-to-GDP ratio of around 200%. If GDP goes down, of course, this percentage goes up. At some point, there should be a run on JGBs and subsequent currency collapse. this is my theory. thoughts?
This is too funny. All the morons who think Benny is just printing to oblivion..too bad there's a big fucking hole right in the bottom of old Benny's bucket.
Dollars disappearing right into the black hole faster than they appeared, lol.
Where'd you get that discount magic mirror you're using JD, from a defunct carnival funhouse? I think it may be malfunctioning...sure is giving you one helluva distorted reading on today's action, apparently.
Keep in mind that the song "There's a hole in my bucket" is defined by a potentially infinite loop...
Jdrose, someone junked you because they could not handle the truth. That debt black hole in US banks and gov't is sucking every fresh printed dollar directly into it. It is deflation bitchez!!
right, yachts and ferraris have completely declined in price. you and Bernanke are correct, there is no inflation.
Exactly, because you can eat planes, which are getting cheaper.
http://wrongtown.blogspot.com/2006/01/man-eats-plane.html
+++
$600B is barely enough to ante up in a $60T+ global bond market that is ready to implode.
When in grizzly bear country and confronted with a bear. You run.
No you can't outrun a grizzly which can run 35mph through the woods and brush.
But you can outrun your buddy.
it's all relative.
We are playing a game of musical chairs on the titanic. We can "win" the game for awhile until the last chair finally gets washed overboard.
So how many minutes before midnight are left on the Doomsday Clock?
-18720
ish
LOL
What's happening in 13 days?
13 days times 24 hours times 60 minutes = 18,720
Another pure grain alcohol and rainwater Mandrake?
"Right-o, Jack. Ah yes, and a little cold water on the back of the neck."
The December 7 events, something about a flock of swans in Europe?
At this rate we'd be lucky to get a flock of seagulls
Last time Europe had one of those...
http://www.youtube.com/watch?v=uUjIA3Rt7gk
You call that lucky?
rather 13 trading days ago??? (i knew that minus sign on the keyboard would come in handy one day)
I follow Bernanke and the Ponzi method to salvation. Never look back, never admit mistakes. :>)
Down to seconds left Im sure.
Dr. Manhattan will save us.
QE12 is the midnight so 10 more QE's. And it's gone.
Euro completly and utterly bidless...ohhhh its sooo exciting. I would imagine there will be some shorts being pulled during the FOMC minutes release though. Might try a cheeky scalp.
Careful.
The overnight may see a EURUSD retrace to ~1.354.
Jus' sayin'.
:D
That's what i am saying, i will be buying in the hope that there will be shorts momentarily pulled from the market. Its already ridiculously oversold, haven't seen her like this in a brave while.
My robots are already long EURJPY, EURUSD, GBPUSD and CHFJPY. The yen has problems of its own and, as everyone knows, the USD is hardly a panacaea.
Stay nimble, friend. This one could put a crick in your neck! Ha!
Best of luck trading!
Orly
I think we need a reason why Spain, Portugal, Ireland bond spreads will not widen further tomorrow and beyond before we can be long EUR-USD. Nothing goes in a straight line, but what can the EU do to stop the bleeding right now?
Now, it is just a matter of the pair being too stretched. I cannot recall having seen the EUR finish the day -240 pips...ever. Some give-back is (probably...) inevitable. A good target is the 50% Fibo-retrace from the last leg down, which puts upside resistance at about 1.354.
Or not.
:D
I respect the technicals, but 1.354 seems a bit rich considering the Spain blowout today. I am surprised that the Euro weakness has not led to more stock market losses so far.
That being said, the buy back into the close is in effect until it isn't, just like Jan, Apr, Aug tops.
That's why I reserve the right to bail at the first sign of an Imperial cruiser.
:D
yeah orly, cant see it reclaiming 1.3500 with any vigor, good resistance at 1.3480 if we are to assume that the big selloff has began(after today and yesterday, im assuming it). In saying that, we are close enough to the 1.3665 (1.1875-1.4285) fib, so a minor bounce is not out of the question...bids will only be from technical traders and bots though.
Got my 'bots rolling. GBPUSD isn't responding though. Wonder what's up with that...
The EURUSD pair is coming upon a fairly major inflection point over the next few trading sessions. It is bouncing now off the 38.2% Fibo as drawn from the low of 06/07/10 to the high of 11/05/10 (an "inside" Fibo range...). Also, there is a trend line with the bottom at 06/07/10 and a touch of the line at 1.26 on 08/24. If it can break these two barriers, it could be off to the races, for sure.
On the other hand, it would be very wise to watch for a bounce in that area.
The only reasons I say that the pair could come back to touch (not reclaim with any vigor...) the 1.35 level is that the pair is, as you say, already crazily oversold, the US has a holiday-shortened schedule and the snap-back rallies off these moves over the past few months have been huge.
Of course, when it becomes apparent that the move higher is failing, I just turn it around and trade short.
:D
You're right, SnF. The Euro looks dead in the water, like it took a major ass-whipping and can't even get off the floor. There is no upside spring at all. I'll pull the bots and wait to see what happens.
:D
Y'all have a good evening!
Hope you made lots of money in the short kill zone you called from Sunday night, Orly.
Lucky 13 trades pour moi including AUD/USD and (i love) the Dax.
Congrats, Ro! Keep it up.
I was flat into the Sunday open and just happened to read your stuff you posted at BK, I think........also was thinking about where the risk was skewed if the market might sell the Irish news.
Also that downgrade of NZ by the rating agency was a twist that did not fit the timing either.
I think F Scott Fitzgerald summed up trading with the following.
Not saying that applies to moi but you get the drift about getting long, then getting short, then long or a stand aside.
That's what I like to call "trading." :D Love it.
Normally (not now, ha!), I can look at the four-hour, put on the appropriate algo and then mosey around. Can't do that now. I can't wait 'til this thing settles so I can get some good sleep! Maybe into the new year things will relax...hopefully.
It is best to stay very nimble now and change your mind as often as the market changes it for you.
And, just for the record I am flat again........wait and see. If the ECB starts calling Zero Hedge and BK asking for solutions the market will probably rally just on the overall realization that rational thinking has finally emerged into the light of day.
Also watching that fucking EUR/CHF which has been hovering just around 1.33 all day.
Is this the real Detroit breakdown or no? I say not yet. May be wrong about that but can always pick another spot later.
I can't tell if this is the real deal yet or not. It would make sense but you know how they can pull rabbits out of their hat.
For my explanation on which key I think will tell us, please see my response above to SnF.
:D
A retest of 1.35.......or, next stop and quick a trip down to 1.30.
Merkel's vote is for 1.30.........looking for short entries on retraces.......If
Your call to short Sunday night may have been one of the most precient and timely trading calls of all time......within a spit shot of the very top of the DAX.
I hope you made a killing.
Back to trades; maybe watch for confirmation of 'risk off' on breaks lower from 0.9700 AUD/USD, and 0.9900/50 AUD/CAD.
Okay, call me crazy but it seems to me that the EURUSD and the GBPUSD are making what I call a "birthday cake." I don't know if there is some professional term but this pattern appears all the time, sometimes as many as six birthday candles in a row.
All a birthday cake means is that a long candle will be completely retraced by the adjacent candle. This looks like the same pattern to me on the Daily charts.
Of course, I could very well be wrong but it will be interesting to see if the pairs have made a birthday cake at this time tomorrow and show a complete retracement of today's move.
P. S. I try not to make a killing. I try not to lose a killing, either. :D
Thanks. I do appreciate it.
Don't know about your candles but I love birthday cakes.
One other pair I think is worth watching; EUR/CHF at 1.3325.......hanging at that price ALL FUCKING DAY from about 09:30 ..
If EUR/CHF breaks decisively below that major pivot then my best guess is there is a flight of capital coming out of Europenan banks into Swiss banks which may also signal a round of bank runs........ZH has been pointing to a run on Irish banks. No doubt if I am thinking about it out loud then the hopefully the ECB and the IMF and the Commission have all of the Humpty Dumpty repairmen called up and working triple OT to get the backed up shit from permanently clogging the financial sewer pipes.
Funny how all the dots are looking so connected.
PS........absolutely make a killing........that is what you are being paid for to assume risk.......one of the things I love about trading; the rules are simple and remember you are taking money from bank traders with a lot to give.
I mean I am careful, not shooting for the home run, i.e., to me, "making a killing." Just want to be able to double my account quicker each time...like a timing game. ;)
The EURCHF just unloaded the past couple of weeks. It is very tired and needs to rest. It should not break through these levels, I am afraid. It looks like the first stop in a slight retrace would be to ~1.3427 and the second stop would be 1.348.
After that...who knows?
And what I mean, also, is that fundamentals don't matter any more; only risk tolerance matters in 4X. Trade the charts. Otherwise, you'll make yourself insane. :D
I agree it pays to play safe........but there is also pushing the edge of the envelope. Just another way of saying about knowing oneself, experience, limitations and fears and all of that.
Must disagree with you about the fundamentals, but like technicals it is all subjective to a degree.
Personally, I love fundamentals.......lots of puzzle pieces to play with and learn from.
Always like the dialogue with you, Orly.
Predominant buying in gold and silver with the dollar seeing strength. We've seen this trade before. The dollar is following gold. Why? Is it that other currency's are buying gold? Anyway it goes, Gold/USD trend continues. Hendry said dollar/gold meltup is a likely play. But for how long?
With the dollar's gain in value gold is being pushed from both sides. Like a zit about to pop right in Blythe Masters' face, the place is about to get messy. How much longer will Gensler allow the market manipulation by the Majors to continue? Once the COMEX is done right, the silver game is over. There is one thing that could happen before then however. If the market is cornered it may cause us to breach the fort. Keiser is buying silver on the 11th, right after Cantona is done stuffing his mattress full of Euros. I will be buying silver until then, to front run the whole game.
Looks like the Buy Gold crowd is going to get a Colon Cleansing for Thanksgiving. LMFAO!!!!
Better take another look- those are the walls of your colon.
You misspelled coffin.
...to make room for the Christmas Feast!
jory, What am I missing? Today, SPX is -1.5%, gold up 1.3%.
Buy Gold crowd going to get a colon cleansing?
Who needs a high colonic when North Korea is showing off its new U235 centrifuge gallery of excellence to former Livermore Lab directors? Might not an accidental tactical shell get dropped in an 8" howitzer and cause major colonic releases in world markets? If you are short gold, you should get some brains and much better advice.
+++++
Not everyone can get it right... Let nature take it's course.
The North Korean gangsters are just short on cash to buy food for the starving masses. No need to react to the tantrums of a Nation that displays the emotional aptitude of a psychopathic toddler. Big daddy is looking the other way right now because he is sore with the Americans for calling him on his cheating. I truly do feel for the South Koreans who have to live next door to these crazies.
Got GOLD? Once fiat money is gone in an instant, then what? You'll wish you had it. It's for protection, not investing.
This is not any different than the Reagan Plan to bankrupt the USSR over military expenditures. The US is capable of printing more money than anyone else. What no one is paying attention to: The massive debt Reagan created that tossed us into recession.
While some may praise the Bernanke for keeping us afloat, what have the bankers actually done? They have created massive debt obligations that all nations will eventually have to trade infrastructure and savings for, e.g. Ireland, Greece, etc.
Dollar strength? I think not. Debt strength? Absolutely and reconciliation is going to be a bitch. Revolution versus entitlement handouts- who will win?
Alan Greenspan called, he says thank you for over-politizing the era so no one points a finger at the fed or his neck.
Nothing political about it. Did not Reagan pursue an aggressive military build-up to take down the USSR? Did not this debt cause a recession? Do you actually believe there is a difference in parties? Do you think that Greenspan did not have his own orders from the elite masters?
Oh wait...you think you know so much more than everyone else...
Watch for the inevitable turnaround at about 1pm. Equities will run back up, as always and repeat yesterday's action.
LOL!
In light of the POMO action this week, the fact the market cannot stay even or rise is a better indicator of the loss in equity value. There are better plays- especially in fx.
Go ahead buy the dip ASAP, you may miss the rally
I own two stocks right now, AAPL and PCLN. My biggest holding by far has and continues to be PMs. I've stated that several times here. AAPL and PCLN are both gains for me, even with this dip, I'll wait to see if they pull back before adding.
Geez I'm sorry to hear that.
Once people are tired of being groped at airports and stop some discretionary travel I would imagine PCLN will be seen for all momentum and no fundamentals at this valuation.
Bullshit! People won't stop traveling because of airport security. Man, you guys turn everything into a "just wait until people...they'll riot/stop traveling/run on the banks, etc." situation.
With a P/E of 44 PCLN is assuming that every unemployed person starts taking cruises and flies to an exotic destination...that is the "Bullshit!" you are buying with that stock in my opinion.
P.S. - Harry you like getting the old crotch grabbed and fondled by airport security?
It only takes one final straw Harry. All was well in 18th c. France, and the USSR....until it wasn't.
Rather than deal with the hassle, I've certainly scaled back my holiday, and work travel plans. WebEx, or being groped by a bunch of blue shirts...hmmm...though choice there.
I didn't junk you, because you haven't offended me.
But I thought it should be pointed out that you've stated several times in the past week that the S&P would be making new yearly highs this week. That obviously isn't going to happen.
What do you think will happen w/ the indices b/w now and then end of the year? Just curious.
1175 is your backstop on SPX. It won't violate that. I still say we end year at highs on SPX.
I think I missed the rally in AAPL. either that or my chart is upside down.
Nice Tam, Ras Bongo. Greetings from The Most High.
This has been the pattern, just feels like today is different as the Brazilian Market has broken the neckline of a H&S top. Look at Copper, two days ahead of Gold the whole way. WATCH OUT.
Looks like the turn is beginning a bit early today. Nothing different about today than yesterday. And by the time we get nearer to closing time, Korea will be thrown in the forgotten bin along with Ireland. News has about a 12 hour lifespan these days.
Irish Rates are Rising--sing along
This may be the day the music died...FOMC will only accelerate any downturn to the close.
Yup, only today I would think they will close this thing green. The "korean conflict" is a non-event. just an excuse for DaBoyz to lure the shorts in and then smoke them into the close. You'd think they would learn by now, but they just don't get it I guess. LOL
Watch for the inevitable turnaround at about 1pm. Equities will run back up, as always and repeat yesterday's action.
2pm - still down 160....
Harry, it's 3:22. I'm still waiting...
The real reason not to be short the USD - when the equity bloodbath begins, everyone will flock to Treasuries, just like in 2008. They smell awful, but they are still less toxic than anything from the EU or Japan, plus at least you have a better idea of what is backing them than in China. Of course, even better would be Norway's bonds, but not sure if there are enough to go around.
"geo-political risk." reason why "short selling is even MORE risky." avoid complexity. period.
Buy bullion. everything else is market timing and black swans
even PM futures prices will take a hit when margin requirements are raised to 100% (eventually), but it will not stop the beast. not this time. not ever.
+1
Thats my take on it too. People will need dollars when the margin calls flood in. This crisis is all about leverage. When round two of credit deflation takes hold, debtors, creditors and investors will be scrambling for dollars as the stock, commodity and bond markets cascade down. Just like 2008; it is very bullish for dollars and bearish for all asset classes (including gold).
The central bank of #Angola cut its overnight rate 394bps to 18.00% from 21.94% following the appointment of a new bank governor $$
It's Rally time
Kabuki
Noh
The fact that the current state of the IMF & SDR's has been kept from being "In the News" says a lot. Maybe not many realize the clock is running out and it lokks like an attempt is being made by the WestBloc to "Buy Time" and testing to see if they can possibly get one more year extended to them. Imagine what one more year can do with all the QEing going on, coincidentally, with the very same 4 currencies that make up the SDR's. I don't believe they'll get away with this. And I expect we will soon see what the EastBloc comes out with as their alternative. I'll paste a bit, and even include the IMF's website.
http://www.imf.org/external/np/exr/facts/sdr.htm
Basket of currencies determines the value of the SDRThe value of the SDR was initially defined as equivalent to 0.888671 grams of fine gold—which, at the time, was also equivalent to one U.S. dollar. After the collapse of the Bretton Woods system in 1973, however, the SDR was redefined as a basket of currencies, today consisting of the euro, Japanese yen, pound sterling, and U.S. dollar.
The U.S. dollar-equivalent of the SDR is posted daily on the IMF’s website. It is calculated as the sum of specific amounts of the four basket currencies valued in U.S. dollars, on the basis of exchange rates quoted at noon each day in the London market.
The basket composition is reviewed every five years by the Executive Board to ensure that it reflects the relative importance of currencies in the world’s trading and financial systems. In the most recent review (in November 2005), the weights of the currencies in the SDR basket were revised based on the value of the exports of goods and services and the amount of reserves denominated in the respective currencies which were held by other members of the IMF. These changes became effective on January 1, 2006. The next review will take place in late 2010.
The SDR interest rateThe SDR interest rate provides the basis for calculating the interest charged to members on regular (non-concessional) IMF loans, the interest paid to members on their SDR holdings and charged on their SDR allocations, and the interest paid to members on a portion of their quota subscriptions. The SDR interest rate is determined weekly and is based on a weighted average of representative interest rates on short-term debt in the money markets.
SDR allocations to IMF membersUnder its Articles of Agreement, the IMF may allocate SDRs to members in proportion to their IMF quotas. Such an allocation provides each member with an asset (SDR holdings) and an equivalent liability (SDR allocation). If a member’s SDR holdings rise above its allocation, it earns interest on the excess; conversely, if it holds fewer SDRs than allocated, it pays interest on the shortfall.
There are two kinds of allocations:
General allocations of SDRs. General allocations have to be based on a long-term global need to supplement existing reserve assets. Decisions to allocate SDRs have been made three times. The first allocation was for a total amount of SDR 9.3 billion, distributed in 1970-72 in yearly installments. The second allocation, for SDR 12.1 billion, was distributed in 1979–81 in yearly installments.
The third general allocation was approved on August 7, 2009 for an amount of SDR 161.2 billion and took place on August 28, 2009. The allocation increased simultaneously members’ SDR holdings and their cumulative SDR allocations by about 74.13 percent of their quota.
Special allocations of SDRs. A proposal for a special one-time allocation of SDRs was approved by the IMF's Board of Governors in September 1997 through the proposed Fourth Amendment of the Articles of Agreement. Its intent is to enable all members of the IMF to participate in the SDR system on an equitable basis and correct for the fact that countries that joined the Fund after 1981—more than one-fifth of the current IMF membership—had never received an SDR allocation.
The Fourth Amendment became effective for all members on August 10, 2009 when the Fund certified that at least three-fifths of the IMF membership (112 members) with 85 percent of the total voting power accepted it. On August 5, 2009, the United States joined 133 other members in supporting the Amendment. The special allocation was implemented on September 9, 2009. It increased members' cumulative SDR allocations by SDR 21.5 billion using a common benchmark ratio as described in the amendment.
============================================
Nov. 18 (Bloomberg) -- The International Monetary Fund said China's yuan doesn't "currently" meet the "freely usable" criteria required for inclusion in its Special Drawing Rights valuation basket made up of the dollar, euro, yen and pound.
[[[ me:the below sentence contains the "Hail Mary" attempt by the US/UK led WestBloc, hope you noted the 4 currencies that make up the SDR and all 4 being the QE'ers ]]]
IMF directors urged the issue be kept under review, according to an e-mailed statement, which also signaled that the fund will next year begin an examination of the indicators used to select currencies. The IMF this week lowered the SDR weights of the greenback and yen and increased that of the euro based on the currencies' share of global trade. The yuan has gained 2.8 percent versus the greenback after China scrapped a two-year peg on June 19 amid the threat of rapid price gains and pressure from the U.S. to allow appreciation.
"Although China has become the third-largest exporter of goods and services on a five-year average basis and has taken steps to facilitate international use of its currency, the Chinese renminbi does not currently meet the criteria to be a freely usable," the Washington-based IMF said.
The Group of 20 nations will discuss including China's yuan in the currency basket for SDRs when it meets next year in France, Yonhap News reported this month, citing South Korean officials it didn't identify. Zhou Xiaochuan, Governor of the People's Bank of China, last year said the IMF's SDRs offer "light in the tunnel for the reform of the international monetary system."
Nobel Laureate Robert Mundell, an economics professor at Columbia University, said in June in Hong Kong that the IMF should consider adding the yuan to the SDR basket. , Goldman Sachs Group Inc.'s chief global economist Jim O'Neill said on April 15 that the Chinese government may let its currency become free floating within five years.
The IMF this week cut the greenback's weighting to 41.9 percent compared with 44 percent after a 2005 review while the yen's fell to 9.4 percent from 11 percent. The euro's share rose to 37.4 percent from 34 percent.
SDRs are the IMF's unit of account.
--Editors: Garfield Reynolds, Jonathan Annells.
=======================================================
http://www.twnside.org.sg/title2/resurgence/2010/234/cover06.htm
The Stiglitz Commission, which advised the June UN conference and helped draw attention to the deficiencies of the global reserve system, also suggests that the IMF take charge of the system and that SDRs be used as the global reserve currency.
But it suggests that if there are objections to the IMF playing this role, a 'Global Reserve Bank' could be created.
It foresees the global currency (probably SDRs) being allocated annually to countries based on their weight in the global economy, their needs, or a combination, and also suggests varying the total amounts issued to respond counter-cyclically to global economic trends. The Commission maintains that such an arrangement 'should be designed to regulate the creation of global liquidity and maintain global macroeconomic stability' and make problems 'related to the creation of excess liquidity by the reserve currency country less likely to occur'. It adds that the system should 'be designed to put pressure on countries to reduce their surpluses and to thus reduce their contribution to the insufficiency of global aggregate demand' (Commission of Experts, 2009).
Those fucking pecker heads.
"The fact that the current state of the IMF & SDR's has been kept from being "In the News" says a lot. [...]"
Time to buy AUD, BRL, CAD, CHF, NOK, NZD, SEK, SGD and other currencies which are not part of that debt-ridden SDR basket, and to leave them under the pillow for a long time. Also PMs, of course.
GREAT POST.
What else can you expect in the 11th hour of Wall Street bonus season. First prize seven figures; second prize a set of steak knives; third prize you’re fired. Just the thing to support a broad economic recovery – NOT!
I can hear the brass balls clinking from here....
KING DOLLAR
Emperor Dollar -- in his new suit -- magnificent!
I'm hoarding Samsung TVs.
Major news on Russia and China tonight:
China and Russia have decided to renounce the US dollar and resort to using their own currencies for bilateral trade, Premier Wen Jiabao and his Russian counterpart Vladimir Putin announced late on Tuesday. Chinese experts said the move reflected closer relations between Beijing and Moscow and is not aimed at challenging the dollar, but to protect their domestic economies. "About trade settlement, we have decided to use our own currencies," Putin said at a joint news conference with Wen in St. Petersburg.
http://business.asiaone.com/Business/News/Story/A1Story20101124-248833.html
That stuff is so old. Please stop posting it like it is the end of the world.
All it is is a two-way ruble-renmingi credit line- an FX swap to the tune of a massive fifty ...billion dollars (/sarc...). They are only opening the lines so that can trade directly instead of having to twice convert to/from USD to make a transaction, meaning ONLY that they get paid quicker.
Your article means very little, I am afraid.
/:
Which translates into less USD reserves necessary for the worlds largest energy supplier and the world's largest energy consumer to transact business. Where does the excess USD get pushed as they have less use between these two economies? I never implied it is the end of the world. But it's relevance to future values of currencies should not be overlooked. Some people are very short sighted and hopefully they can adopt a longer range vision in spite of the accelerating velocity of fiat currency.