USD

US Wrap: GBP, CHF Favored; EUR Shunned

UK budget well received by ratings agencies; creates bank levy, raises VAT, capital gains tax, Cuts spending
Germany and France propose similar bank levies to UK
US existing home sales fall 2.2% in May
Richmond Fed survey dips to 23 in June from 26 in May; much stronger than Philly
BOCs Lane: Strong CAD will drag on Canadian economy; will figure in monetary policy and economic decision-making
US judge overturns Obamas six-month deep water drilling moratorium; crude falls.
S&P 500 falls 1.6%, closes below 1100, US bond yields end lower; 2-year note falls to 0.68% from 0.725%, 10-year note at 3.16% from 3.24% Monday

EUR/USD shared the spotlight with the pound and Swiss franc today. The pound was supported by a credible austerity budget (according to the ratings agencies), helping boost the pound from 1.4689 lows at the begging of the speech to 1.4859 highs by mid-afternoon. EUR/GBP fell below 0.8300, ending the day at 0.8285.

The S/franc rose to a record high versus the euro today after SNBs Jordan explicitly called an end to forex intervention overnight. It fell as low as 1.3586 during the New York afternoon.

EUR/USD dipped to 1.2250 but maintained support at the 1.2240 level despite weak US housing data which helped erode equity prices. A short-covering rally late in Europe saw EUR pop to 1.2318 before falling back to the 1.2260s in the afternoon. Stops lie below 1.2240 and may prove attractive to snipers in early Asia.

USD/CD rallied today as crude prices fell o the overturning of the drilling moratorium and on comments from BOCs Lane about the strong CAD slowing the economy. AUD slipped back to end the day on its low at 0.8716 as risk aversion returned late in the day.

Housing Collapse 2010?http://endoftheamericandream.com/archives/housing-collapse-2010

Will we see the start of another housing collapse before the end of 2010? That is what a number of top economists are beginning to fear. The truth is that there are some very troubling signs in the housing numbers. The massive tax credit that the U.S. government was offering to home buyers helped prop up the housing market for quite a while, but now that the tax credit has expired, many real estate professionals are bracing for the worst. The reality is that foreclosures continue to set all-time records, the mortgage industry is a complete mess and another massive wave of adjustable rate mortgages is scheduled to reset in 2011 and 2012. As the U.S. economy continues to falter, and as the nation starts to deal with the economic fallout from the Gulf of Mexico oil spill, many are now wondering how in the world Americans are going to be able to afford to purchase millions of these homes which are still massively overpriced. The American Dream is still way too expensive for the vast majority of Americans. So are there signs that housing prices in the U.S. could be on the verge of another major decline?


Nearly one million US workers cut off unemployment benefits http://www.wsws.org/articles/2010/jun2010/unem-j18.shtml

With 12 Democrats joining a unanimous Republican bloc, the US Senate voted Wednesday to defeat a proposed extension of unemployment benefits for workers who have been jobless for nearly two years. The bill would have extended unemployment benefits for those out of work more than six months, until November 30.

In the two and a half weeks since June 1, when the last extension expired, some 903,000 workers have seen their benefits cut off. By June 26, that number will top 1.2 million.

Meanwhile, the Labor Department reported that the number of new claims for unemployment compensation jumped to 472,000 last week, the highest figure in several months.

The result is that a Congress that rushed through a $700 billion bailout of Wall Street in October 2008 in a matter of days

Some worries amount in case of a double dip recession the CBs are already out of ammunition.
Since for ex FED controls just the short term bonds interest and has no control over long term that would mean a sharp rise of long term interest but that will be deflation .

Must Know Yuan Revaluation Summary:Possible Game Changer, Winners and Losers


Assuming China is both serious and quick to act in its stated CNY revaluation, then the news is a likely game changer for markets, certainly in the near term, because it is a genuine boost for risk appetite that has been sorely lacking from markets for the past months and provides a critical counterweight to the unending news of stagnation or sovereign default worries from most of the developed world.

If in fact China takes concrete steps to revalue the Yuan, the move is viewed as positive for risk assets.

The key points:

Anyone who earns more in Yuan than they pay out will benefit. Thus those importing to China get a boost, those manufacturing in China and exporting most of that production (rather than selling it in China) will see their costs rising and be hurt.
The rest of the worlds goods become more competitive vs. those of China, increasing export revenues worldwide.


WINNERS:
Those selling to China, most major multinationals and especially the big commodity exporters, will earn more, as will those already established in Chinas retail sector, like major multinational automakers (VW, BMW) and fast food chains (YUM).
Chinese firms that import most of their inputs (airlines, manufacturers) AND sell mostly to the domestic market will benefit to the extent that savings are greater than loss in revenue from exports. Examples include Chinese airlines and those primarily selling imported goods and services to China (aerospace, computers, consulting, specialty heavy equipment, etc).
Chinese Retail Sector: The move is likely to accelerate foreign investment in Chinas retail sector as CNY earnings now become more attractive
Because China is a major buyer of commodities, commodities and commodity-based currencies are have also been immediate beneficiaries of the move, particularly the AUD, NZD, and CAD.


LOSERS
Those dependent on Chinese products will suffer, but China makes few goods that cant be gotten elsewhere. Major importers from China like Walmart should suffer, as will Chinese exporters, which will need to focus more on the domestic market.


The move also potentially diffuses a destructive potential trade war between China and the US, which has been openly losing patience with Chinas currency policy, which the US and others asserted gave China an unfair export advantage. The issue was due to be raised at this coming weekends G20 meeting but is now likely to be pushed off as nations give China more time to activate its new policy.

Again, the key to whether these become longer term trends will depend on the degree and speed of the revaluation. While that is a subject of intense debate, we suspect the Chinese will take a gradual approach to revaluation, and will not hesitate to slow or halt the process of global growth should falter or reverse.

So , China make the move on yuan... but read thishttp://www.marketwatch.com/story/china-keeps-dollar-yuan-band-unchanged-2010-06-20

My question is : when this change in yuan band will work "de facto" ??

Thanks