USD

House arrest
By Lex

Will the latest increase in Chinas reserve requirement ratio put a brake on property prices? Dont count on it. In a perverse way, every increase in the RRR is an incentive to load up on real estate.

To understand why, take a few steps back. In the past, the Peoples Bank soaked up liquidity caused by currency intervention by issuing sterilisation bills. From 2008 onwards, though, as the yield the bank paid on these liabilities started to rise above what it was earning on its assets mostly US Treasuries this became an expensive business. So the PBoC started locking up more bank deposits through the RRR: Fridays increase, to 19 per cent, was the seventh since January last year. On its own terms, this has been a successful strategy. As Commerzbank notes, liquidity created through foreign exchange intervention since 2004 has tracked closely the liquidity absorbed via bill issuance and RRR rises.

But consider the implications for potential homebuyers. If bank credit growth is managed primarily through quotas, rather than the price of money, then every increase in the RRR amounts to an assurance that interest rates will not rise materially. In other words, yes, you can afford that second or third mortgage.

Does this matter? Since August 2005, when the official sale price data series for 70 cities began, the average yearly rise has been 7 per cent, well below the annual increase of about 12 per cent in urban disposable incomes. But the average is misleading. It masks the growing inequalities that show up in the consistent failure to hit targets for public housing development, the rise in tactical divorces to bypass one-home-per-family restrictions, and plummeting government approval ratings.

Premier Wen Jiabao has implied that house prices, up for 19 straight months, are unreasonable. In reality, continued rises are eminently reasonable: abstract notions of tightened liquidity are just not as effective as real hits to personal finances.

USDx bear trend that started from july 2001 is still very intact....
in shorter time frame... the first minor resistance is at 83.5xx level... break above that level still wouldn't mean much... likely a bigger correction to 87.50 level.... only break above nov 2005 high of 92.7x would mean bottom in place... so i don't understand why CAtnip keep arguing USDx is bullish..
plain stupidity maybe?... :)

in a 3 mtn tf USDx is well above support...
in a longer 3 y it is still raising...
yes chartastrology is a precise gauge ..for weather forecast

What did happen so far...Olli Rehn announced new round of banks stress test admitting betwenn the lines the previous tests weren't guidance for investors...yes.

heres something i was thinking about earlier..lol..if the us is manipulating its currancy against china why can;t the same be said for cad,aud,chf.especially against the cad @one time it was cost effective for u.s based companys to set up canadian branch due to the exchange rate.but withus tradingbelow parity that there is no longer incentive.so what will happen is those companies get shut down those jobs are returned back to the u.s an employment has been created,the same can be said about aud,chf an pretty much all parts of the globe,but makes more sence to focus on the closes 1st an stronger countries vs usd as they will move to parity fastest removing those jobs.im not saying its a big move but it will create jobs an @ the end of the day thats what its about.another thing those jobs that were lost to china there gone 4good.so what im also talkn about is it will be sector specific like tech,healthcare,auto ect. high quality jobs.im not exactly sure what % of jobs can be brought back to the u.s but im sure they;ll love to have any jobs returned to the states..ok thanks an gl guys:)

BP Rosneft ..don't buy either but buy Seadrill at LSE.
What is strange with that... Putin doing his oligarch buddys a favor kicked Dudley out from joint venture TNK BP . Now with the swap Dudley is in again but at oligarch-free state co Rosneft.
The TNK BP wasn't good for Russia and neither for BP and it is questionable ,too, this alliance.
Because Rosneft is even more poorly managed than the Oligarch's TNK which had been bankrupt
without BP management because Oligarchs only take profit they don't invest. Rosneft is managed by a hord of kremlin-selected officials who cannot tell a drill tower from a vodka bottle.
Any alliance will fail. Thus I favor seadrill a norwegian co which is most likely to get big contracts
from BP Rosneft. Some USbanks ( JPM ) hold shares and some Putin buddies.