Archived IMT (2010.09.29)
US FX PRESSURE ON CHINA is another source of trouble for the USD (the other source being anticipated QE2) as US House of Reps is set to pass legislation enabling US to levy tariffs against nations whose currencies said to be artificially and fundamentally devalued. While weve been in this boat of threats before, the House bill must be backed by the Senate before winning approval from President Obama. Although it is unclear whether the White House will approve such a combative bill on China, FX markets simply need prolonged attacks from Congress on China to sell USD further. The RULE OF THUMB in FX is to sell any currency whose country engages in policies of competitive devaluations. Readers of my book will find in detail how the Bush tariffs on Chinese and Brazilian steel manufacturers coincided with the top of the US dollar in 2002. You will also remember that 2002 was a midterm-election year. USDCAD seen at 1.0375-80 ahead of tomorrow's Jul GDP, exp at -0.1%, the first negative monthly reading since August 2009. But before that, we have UK Sep GfK Consumer Confidence seen at -19 from -18 due at 23:01 GMT
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