EURUSD 1.1851 |
USDJPY 111.52 |
GBPUSD 1.3772 |
AUDUSD 0.7485 |
USDCAD 1.2406 |
GBPJPY 153.59 |
EURJPY 132.15 |
AUDJPY 83.48 |
CADJPY 89.86 |
Silver 26.23 |
How to improve your decision--makingh between Nasdaq100 and SPX by watching technicals in bond yields - Details in video description.
Bitcoin versus Miners Performance
As many of you know 2023 was kind to members of our WhatsApp Broadcast Group who snapped up shares in bitcoin miners, while 2024 has so far been more superior to Bitcoin than most of the miners...
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CNBC
Chinese exporters who made a big push only a year ago to bill in euros are increasingly turning their backs on the wounded European currency and demanding dollars instead.
By contrast, Beijing last week said a report it was reviewing the euro portion in its mountain of foreign exchange reserves was groundless and it calmed markets by saying that Europe remained a key investment market.
But Chinese exporters and the local governments that oversee them are less confident. They are trying to keep a wider berth from the euro, at least for now.
Hangzhou Natutex Apparel, a producer of special fabric for outdoor use, ships nearly all of its 10 million yuan ($1.5 million) in annual exports to Europe.
Last year, when the European economy looked to be on solid footing, it settled 50 percent of sales in the euro.
It has cut that back to just 5 percent this year.
"The reason is obvious. You have to be alert about exchange rates in the foreign trade business," Yu Yueping, Natutex chairman, said. "It would be too bad if your hard-earned profits were eroded by exchange rate changes."
The euro has tumbled 17 percent against the yuan in 2010 as the Chinese currency has been locked in place against a strengthening dollar.
Short-Term Contracts
Local governments are also telling exporters to be cautious about settling trade in the European currency.
Trade officials in Jiangsu, a prosperous manufacturing province, told exporters to sign short-term contracts when dealing with European clients and to cut back on euro-based settlements, the Jiangsu Business News reported.
"Considering the euro's uncertain future, exports to European countries should be settled in yuan if possible. If the buyers do not agree on yuan settlement, then use the dollar," it said.
More than 80 percent of total Chinese exports are paid for in dollars, according to local reports.
The government had been trying to change that, to encourage more euro settlement as part of a broader effort to diversify its foreign exchange reserves. It had seemed a smart - and easy - path to diversification.
Not only do euro bond markets offer the only real rival to the depth and liquidity of U.S. debt markets, but the European Union is China's biggest export destination, meaning lots of cash flows from Europe to China every year. Times have changed.
Shishi Daily, official newspaper of an export base in coastal Fujian province, reported cheerfully last week that its exporters were doing well after heeding warnings to shun the euro.
"Exporters in Shishi were told by officials via our newspaper: Don't use the euro, use yuan or the dollar! Many exporters accepted this suggestion, so even as the euro has kept falling, exporters in Shishi have not reported heavy losses," it said.
How to Make a Sausage
Peng Hu's sausage empire in northwestern China has been less successful.
His firm, Xinjiang Huarui Casing Products, every year exports about 50 million yuan worth of the material that encases sausage fillings to Europe, especially Germany and Austria.
With all his customers paying euros, he has suffered steep losses.
"I have tried hard to ask my clients to settle trade in other currencies, in dollars or yuan or whatever, just not euro," Peng said. "They have yet to agree, but I will keep trying."
About 4,000 kms (2,485 miles) away in his textile factory, Yu reflected on the vagaries of the foreign exchange market. The dollar would probably not remain his currency of choice forever.
"Life has to move on and the euro may go up again a couple of years from now," Yu said.
CNBC.com
Austerity measures imposed by the euro zone will likely push the euro back towards $1.50 or even $1.60 but the European currency is unlikely to achieve the status of reserve currency, economist Warren Mosler, founder and principal of broker/dealer AVM, told CNBC.com Friday.
The euro has fallen sharply versus the dollar since the euro zone's sovereign debt worries began, with many analysts predicting it will slide to parity with the greenback or even below.
But Mosler thinks the recent plunge has been caused by portfolio adjustments investors shifting assets from euros to gold or dollars and that this trend is nearly over.
Rising taxes and spending cuts, pledged by governments in the single European currency area to cut debt, are "like a crop failure" because they will decrease the amount of euros available, he said.
"Everything they do in the euro zone is highly deflationary," Mosler told CNBC.com in a telephone interview.
"I think there's a very good chance the euro would be stronger because of the austerity measures; this can very easily get it back to $1.50-$1.60," he added.
The euro is unlikely to become a global reserve currency because the EU's economic policy is geared towards growth based on exports and the euro zone is running a surplus, he explained.
"The only way the rest of the world will hold your currency is if you run a trade deficit," he said. "Economics is the opposite of religion, it's better to receive than to give."
The ECB Could End the Debt Crisis
The European Central Bank could easily appease the fears of default which have plagued markets regarding by creating money and giving it to its members, Mosler said.
The ECB, "if it wants to credit any nation, it can," he added. "The ECB could make a distribution of, say, 10 percent of GDP to each member. The ECB can just credit the accounts of the member nations based on how many people they have. That would reduce all debt ratios this year by 10 percent."
The measure would not contradict EU anti-bailout rules, since the money would be distributed equally among members and if the cash is used to cover the deficit would not be inflationary, Mosler added.
"My proposal is to put the ECB in a position where governments become dependent of checks from the ECB," he said. "Operationally, it's very simple to do, you just credit their accounts. The Finance Ministers would direct the money."
The central bank could make this an annual distribution, and attach financial discipline conditions to it, such as respecting the EU's Stability and Growth Pact.
The country that does not respect the pact does not get the money, making it a more powerful enforcement mechanism and helping fight speculators at the same time, he explained.
Will the Euro break or head further down today - Many Thanks
Market has not reacted looks like we are on hold til NFP in which case we could see EUR/USD above 122 again with option expires reportedly huge today at that level.
Plus 2011 Census are going now and nearly 100k jobs have been created for that and that figure that might aswell be 400k because one person at most is enlisted under 4 job titles. Hence one person is reflecting 3 to 4 jobs.
Have a read at this one...http://blogs.ft.com/money-supply/2010/06/03/us-payroll-revisions/
US payroll revisions
June 3, 2010 10:31pmby Simone Baribeau | Share
Ahead of the past few US nonfarm payroll reports (here, here and here), Ive made a big deal about revisions to the headline numbers in the months (and years) after theyre initially reported. When the economy was getting worse, the Bureau of Labor Statistics massively underestimated the size of the losses in their first jobs reading (for several months revisions exceeded 100,000). Now that the market appears to be improving, the BLS seems to be underestimating the gains.
Read more:http://www.businessinsider.com/europe-banks-2010-6#ixzz0prQwke8P
Right now, European banks are scurrying to try to take advantage of ECB lending facilities because they won't lend to one another. Euribor has been steadily rising since April. This is a product of fears that banks have significant weakness on their balance sheets.
This new assessment of weakness is a result of changing risk dynamics in Europe, particularly the eurozone. Sovereign debt, which once carried a risk-free connotation for countries like France and Germany, has now come under increasing pressure from the bailout of Greece, which France just approved today.http://www.bloomberg.com/apps/cbuilder?ticker1=EUR003M:IND
Even more significant concerns exist about the sovereign debt of the PIIGS states, which are only being propped up by the promise of ECB bailouts and the hope of austerity measures.
And now the forgotten problems of the Eastern European states are starting to resurface, with probable costs for the EU in their future bailouts. Exposure to Eastern Europe is significant for Western European banks, with large amounts for Austrian, German, and French banks.
The reality is banks have lost the ability to model the political risks now visible throughout Europe. They cannot easily weight the chances of state default, or bailout provisions, or even the collapse of the euro.
Value at risk modeling is rapidly changing to adjust to these times, and the result is significant worries about counterparty risk and an over reliance on ECB lending facilities.
This scenario is similar to that experienced by U.S. banks during the subprime crisis. And, like in that scenario, there are banks that will be more desperate for government support.
Europe can repeat the mistakes of the U.S. and allow that to occur slowly, having one of its major investment banks collapse. Or it can make tough decisions now, make the exposures of its banking system more public, and address the issues with sound political-economic moves.
The Eastern European country that has suffered a 26% GDP loss in the past two years was the butt of a cruel joke this morning.
Latvian news agency LETA published a letter from IMF Managing Director Dominique Struass-Kahn supporting a "mini-devaluation" of the lat. Latvia has kept its currency pegged to the euro despite crippling debt because of plans to join the EU.
Turns out the letter from Strauss-Kahn was a forgery!
From the IMF (via FT Alphaville)http://blogs.ft.com/money-supply/2010/06/01/forgeries-and-the-lat/
Regarding this mornings LETA story, which referred to a purported letter from the IMF Managing Director: the letter mentioned is false and we advised LETA that it was forged. It does not represent the views of the IMF.
Our views on the currency are well known and have not changed. We, together with the European Commission and other programme partners, continue to support the governments programme of economic policies that rest on keeping the current currency regime and the plan to join the euro.
Painful austerity continues to be the only option.