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Dollar Demolition Extends To 6th Day As EM/Asian FX Soars Most In Over 6 Years
As the odds of a Fed rate-hike this century drift asymptotically back towards zero, the stability-desirous central bankers of the emerging world are suddenly facing soaring currencies as hot money floods back into Emerging Asian markets. The Rupiah and Ringgit are up almost 3% overnight as everything from the Baht to the Won are surging against the USD. Asian FX is up 6 straight days against the USD (and 8 of the last 9) for the biggest 9-day gain since May 2009.
The China devaluation spike in The USD against Asian FX is rapidly being unwound...
The Dollar Demolition of the last 9 days is the biggest since May 2009.
As all EM FX is soaring...
Led by a massive spike in Indonesia's Rupiah...
So now what will the talking-heads say about a weaker USD? Especially in light of the fact that they crowed about a strong USD being indicative of a strong US economy... is The US now the dirtiest dirty shirt?
Charts: Bloomberg
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Yeah, but usd/jpy is just stuck in the 119-120 BoJ tractor beam. This(EM) thing is setting up for a nasty squeeze on the longs.
Backtracking.
When China devalued its currency by around 2.5% against the USD back on the 12th and 13th of August this year, it "actually triggered a wide-spread revaluation of the dollar. By undermining US export markets, China has effectively taken control of America's interest rate policy from the Fed... showing that China, not America, now sets the pace in the global economy.”
https://www.goldmoney.com/china-and-the-dollar
Not an easy read but it does put the Tianjin explosion on the evening of the 12th August (and subsequent explosions in different parts of the country over the last 2 months) in an interesting context.
Crap versus crap.
Better get some physical gold......tick tock.
You're cutting it a little close.....
Demolition? I'll believe it when there's rubble and someone's speaking into a bullhorn on top of it.
where is Marc to Market ? the dollar bull. Looks like hes gone Gartman
just like most humans - no humility...
all said, article says what happened, but WHY is the dolla going down?
i would say it is tyme, and the fed concurred...
Folks excited about Modi/Obama makeout session, numb towards Brazil, Fed isn't telegraphing USD strength.
Give it a few weeks, narrative will revert back to norm-hell.
Should be bullish for Gold. .......
/S. (Shouldn't be Sarcastic) (but any bullish Gold post has to have a Sarc)
A fiat money system, with historically %100 fail rate, should be bullish for gold. It already seems to be archaic to me that anyone still compares an oz of gold to a failed fiat number that goes up or down.
Wealth is measured in weight, always has, always will.
thereforskin, gold=infinity. so peg a number and be happy. my oz=a bazillion...
Should be bullish for Gold. .......
/S
Thanks for the sarc.....it's not easy going against the gates of hell......but you might want to consider it.
Nothing worth doing is ever easy......buying physical gold is a pain in the ass......do it anyway and you'll thank yourself later.
Throw it in the sock drawer and forget about it. It's never the right time to buy physical....but it feels pretty damn good to have it.
keep betting on the dirtiest of the dirty shirts (usd). 7 days tell you nothing of the trashes in EM Asia currencies (ex Yen & RMB).
Expect it to get worse...
http://www.examiner.com/article/china-launches-new-swift-system-to-take-on-dollar-and-single-reserve-currency
Dovie'andi se tovya sagain (It's time to toss the dice)
The Daily Economist
According to Bank of America Merrill Lynch:
https://app.box.com/s/0o21rzvo4bdff5ka4hk3lvd1d3fmower
The real cost of QE
QE was not a free lunch after all
Eight years after the crisis, we are still debating about the recovery and whether the Fed should hike from zero rates. The world economy is actually losing momentum. Things could have been worse, in our view, without aggressive central bank easing. However, we argue that relying too much on unconventional monetary policies could be a reason for market turmoil this year.
We should have known something was wrong
The Fed “taper tantrum” could have been the first signal that QE had gone too far. The second warning may have been the across-the-board EM sell-off that started in mid-2014, as QE tapering was coming to an end and the market started pricing Fed tightening, a sell-off that intensified substantially this year.
The point when things started going wrong
The Fed and other major central banks were the first to act when the global crisis started and we believe their actions helped avoid another great depression. However, at some point monetary easing appears to have become the “go to” policy tool to address every problem and risk in the economy, when action in other policy areas might have been more effective.
This is when market behavior started to change, reacting positively to bad news. Wall Street was increasingly deviating from Main Street, which in our view was not sustainable. We believe that excessive reliance on unconventional monetary policies has had side effects. We have been experiencing these side effects this year, and there may be more to come.
Now what?
The story of the year so far may be that of a negative feedback loop leading to a bad equilibrium. First, risk assets sold off expecting the Fed to tighten. Then, the sell-off went too far and started affecting the real economy, including in the US. Now, the Fed is not tightening as a result. However, postponing Fed tightening does not necessarily increase the demand for risk assets. This is a new regime, in which bad news is bad news. This is how it is supposed to be, but the adjustment back to normal has not been and is not going to be smooth, in our view.
In the very short term, risk assets could find support from oversold levels. We would be tactically short the four major G10 currencies, against almost everything else, as major central banks either stay on hold (Fed, BoE), or probably ease even further (ECB, BoJ). Our analytical tools also support this view.
However, our risk-on FX recommendations are only tactical. If the US data improves in the months ahead, the Fed will likely tighten and risk assets could sell off again. If the US data remains weak, or weakens even further, we would expect risk aversion, as the threshold for QE4 by the Fed is high—and even were it to be enacted, more QE may not be as effective.
From my link above to ZH article on collateral I'm not sure that Banks want more QE and think this creates risk as this lowers bank reserves or prevents then from increasing bank reserves with good quality collateral.
If US Banks are forced to buy foreign Treasuries when they don't want to really... that is like forcing US Pension Funds, 401K Funds, Trust Fund, to buy more risky investments on Wall Street.
Someones going to take the wall out of wall street and then there going to be hell to pay, then all of a sudden they will change their minds, but it will be too late, the grave was dug now just jump in.
I'm a little confused by this. The "hot money" of which you speak -- where is it coming from? Liquidity cannot be generated merely by decreased probability of a Fed rate hike. Even fiat money isn't quite as fiat-ty as that. There has to be some repo-able collateral somewhere, and this is the mystery marker I'm wondering about.
Absent that, it would seem to be a momo event in currency swaps, not a real relief of dollar funding pressure.
We have seen that in August/September the Fed has conducted $0.4 tn of reverse repurchases where $0.4tn in cash was sucked out of the world economy and replaced with $0.4 tn of treasuries, crashing the world's equity markets in the process. Why? - we don't not know. When the Fed next publishes is reverse repo data I think we will find that these reverse repos have been reversed. i.e. £0.4 tn has flooded back ito the world markets and $0.4 tn of treauries has been repurchased, causing equity markets to recover.
Good point. Did you see http://www.zerohedge.com/news/2013-05-01/desperately-seeking-112-trillio...
- Seems good Collateral Paper is not in sufficient quantities to facilitate Basel Accord, 2015, 2016, and QE of course buys up this collateral paper and we have heard EU can not find enough to move forward
- Fiat, FX Reserves, would seem to be collateral, so if they sell FX Fiat, they can do as you suggest... I guess. What is a few billion fluctuation in reserve or FX investment.
Wow, good research.
China launches yuan-based international payment system, CIPS.
I didn't see that in the article. Though he mentioned Swift and CIPS.
Russia launching own payment system in 2016 too!
MIR :
[img]http://i.imgur.com/17bq4TE.jpg[/img]
Russia launching missiles too !! Psychologically this is important , that little vid of the Russian cruise missiles taking of completely destroys what ? 20 odd years of USA ! USA! , US super cop, US boss, US mighty military, US exceptional and US ALMIGHTY DOLLAH
Why else the immediate propaganda shriek of "four of them crashed "
At least they weren't armed with nukes, unlike those about 50 miles from where I live - courtesy of Uncle Sam (only taken the cunts nigh on 50 years to agree to clean up the plutonium they so kindly dropped on Spain):
https://en.wikipedia.org/wiki/1966_Palomares_B-52_crash
High Emotions in Asia? And Nothing Else really?
Many like Japan and South Korea invest heavily in US Collateral to tie their economy and currency to the USD.
You can even add US Treasuries Registered to this and include the Philippines.
Obama, congress, and the FED says, we have sound Banking and a Sound Economy. At least that is what they Say.
Headlines:
- IMF warns of impending $3 trillion global crunch...
- Debtors face day of reckoning...
- Recession buzz heating up on Wall St...
The Troika or IMF have an interest in seeing lower US interest rates like ZIRP/LIRP. So that might be emotions too, but I see lots of "weakness" in US, EU, Asian, global economies.
I just don't place faith in fluctuations in ownership of FX Reserves, US Treasury holdings by foreign countries. There should be a solution to this, but banks, capitalist, make money from the fluctuations. Revenue is generated.
http://www.treasury.gov/ticdata/Publish/shl2002r.pdf
http://www.treasury.gov/ticdata/Publish/shla2013r.pdf
(http://www.treasury.gov/ticdata/Publish/mfh.txt)
http://www.bea.gov/newsreleases/international/intinv/iip_glance.htm
Last Data is from January 2015.
China 2002 = $95 B, then 2013 = $1,272 B, Today $1239 B
Hong Kong 2002 = $37 B, then 2013 = $89 B, Today $172 B
India 2002 = $5.2 B, then 2013 = $56.6 B, Today $91 B
Japan 2002 = $260 B, then 2013 = $1,023 B, Today $1238 B
Philippines 2002 = $3 B, then 2013 = $36 B, Today $40 B
Singapore 2002 = 19.4 B, then 2013 = $82 B, Today $109 B
Taiwan 2002 = $0 B, then 2013 = $183 B, Today $170 B
Thailand, Today $32.6 Billion
Vietnam, Today $13.3 Billion
South Korea, Today $74.3 Billion
According to my research, markets move in cycles, of which the table of 7 days (5 trading days) plays an important role. For example, when the 21, 35, 42, 63 day cycle line up, it’s Time to get ready for a change in trend (S&P500).
http://tripstrading.com/2015/10/09/sp500-how-cycles-take-their-time/
Yesterday, OCT 8, points at a 7, 21, 42, 119 and 154 day cycle (TripsTrading Cycle Model, TTCM).
Tomorrow and Saturday represent a Bradley Model Date, OCT 9 and 10. According to the Bradley Model: October 9-10 – On these two Days there are very strong turns in both the Middle Terms and Declinations, and this could result in an especially strong turn.
If the total cycle lasts 63 days, the decline will last till OCT 26. The 1850 -30 Price Target is based on the Negative Reversal of SEP 30.
So the cycles seem lined up to change the short term trend. Maindriver of US markets, the USDJPY, seems like a Ball kept under water...
Short covering in thin liquidity. What else is new in this market.
historic run from power in US congress..nobody wants speaker job of the house, the third in line to the president..to me this could be a signal..nobody wants that job because hell is coming to breakfast.
https://www.youtube.com/watch?v=ZX56rbqZhto
Just a correction.
End of US Hegemony, rise of global sovereignty. The financial news cannot be separated from geo-politics... all of this is related to Bretton Woods III, asset backed currencies, global financial reset, and revaluations of currencies worldwide based on assets. The show in Syria, sad as it is for the human lives lost, is an unmistakable MESSAGE / LESSON to the US, that WEAPONS are NOT a globally recognized ASSET.
The US, being mostly dim-witted and primitive, has not yet comprehended the memo. This is why the world will next, ISOLATE, the US and its weapons, to go fuck itself. That would be you and me.
Hey who said the "EM FX dead cat" can't bounce, too??
Todays cats only live two years, those 9 lives have long since past.