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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 |
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Further widely overlooked a liquidity squeeze on fx on friday. Direct connection with failed PBOC bond auction. Listen chart astrologists: no liquidity buys no stocks and no commodities.
Fact is China banks in terms of capital are almost bankrupt. They hold billions of hot money as reserve but lack yuan. The most wierd situation. China policy was wrong all the time. They missed to realize the only duty they had to build a self sustaining domestic market. Now its too late. In fact China lacks entrepreneurs with social responsibility. China has only claim hunters and gold diggers.
* China raised interest rates on Oct 19 for the first time in nearly three years.
* The central bank opted to raise banks' reserve requirements on Nov 19 (9:30am EST) ahead of data which showed inflation hit a 28-month high of 5.1 percent.
October 19 Candle
* SPX on 19th was a bear candle, but continued to push to be bullish till last week without any major reversal
* AUDUSD 0.9956 - 0.9661 (295 pip) on October 19, without follow-through, bouncing back on the 20th.
November 19
SPX still closed higher than open
AUDUSD around 100 pips lower on 19th with follow-throughout the week
It be interesting to see how the AUDUSD opens Monday :-)
the inflation in China will skyrocket and political and social pressure gets out of control.
PBOC has missed to do what they must have done, to appreciate the yuan and rise rates
and now its too late . The idea that China can absorb hot money is dead wrong.
So it is hot money that drives Aussie.
China Fails to Complete 91-Day Treasury Bill Sale, Traders Say
By Bloomberg News - Dec 24, 2010
Chinas government failed to draw enough demand at a bill sale for the second time in a month as seasonal demand for funds and higher reserve-requirement ratios left banks with less cash.
The finance ministry sold 16.76 billion yuan ($2.53 billion) of 91-day securities, falling short of the planned 20 billion yuan target, according to a statement on the website of Chinabond, the nations biggest debt-clearing house. The average winning yield was 3.68 percent, higher than the 3.22 percent rate for similar-maturity debt in the secondary market yesterday.
China needs to return to a prudent monetary policy to curb prices and control money supply, the Peoples Bank of China said in a statement posted on its website today. While inflation pressures are rising, regulators will allow reasonable growth in lending, the statement said.
Banks are badly short of cash, said Qu Qing, a bond analyst at Shenyin Wanguo Securities Co. in Shanghai. Given the cash squeeze, the central bank probably wont announce any tightening measure by the end of this year.
The seven-day repurchase rate, which measures lending costs between banks, has more than doubled in the past two weeks and yesterday reached a three-year high of 5.67 percent, according to daily fixings published at 11 a.m. by the National Interbank Funding Center. The rate slid seven basis points today to 5.60 percent.
Rate Swaps
The one-year interest-rate swap, the fixed cost to recieve floating payments, has dropped 25 basis points from a two-year high touched on Nov. 29, reflecting easing speculation the central bank will raise interest rates as the cash crunch worsened. The rate fell one basis point today to 3.14 percent. Policy makers on Dec. 10 ordered lenders to set aside more money as reserves for the third time in five weeks to contain inflation.
The cash shortage has also sapped demand for bills sold by the central bank. The monetary authority has sold 1 billion yuan of one-year bills at each of its last four weekly auctions, the lowest sales amounts since October 2007.
The market is desperate for cash, said Chen Liang, a bond analyst at Guohai Securities Co. in Shenzhen. Its too costly to park money with debt at such a price given the seven- day repo rate has risen above 5 percent.
Accelerating Inflation
The yield on the 3.67 percent note due October 2020 was little changed at 3.81 percent, and the price of the security was at 98.89, according to the China Interbank Bond Market.
The finance ministry sold 11.55 billion yuan of 91-day bills on Nov. 26, less than the planned 20 billion yuan. The average yield was 2.74 percent. Chinas inflation accelerated to a 28-month high of 5.1 percent in November, the statistics bureau said on Dec. 11.
The yuan has risen 0.3 percent since Dec. 6, when 30 senators sent a letter to Chinese Vice Premier Wang Qishan calling for the yuan to appreciate meaningfully before President Hu Jintaos visit to Washington next month.
The currency strengthened 0.24 percent to 6.6270 per dollar as of the 4:30 p.m. close, the biggest advance since Nov. 9, according to the China Foreign Exchange Trade System. Its risen 0.43 percent in the week, the biggest weekly gain since October.
Some banks may be buying the local currency in the foreign-exchange market because its hard to borrow money in the fixed income, said Li Tao, a foreign exchange trader at Shenzhen Development Bank Co. in Shenzhen. There is also concern the appreciation may get quicker before President Hus visit.
Twelve-month non-deliverable forwards climbed 0.13 percent to 6.4993 per dollar, reflecting bets the currency will strengthen 2 percent in one year, according to data compiled by Bloomberg.