USD

Nomura's take on what tomorrow's FOMC announcement and press conference would be.

From MNI FX Bullets

Nomura offers this outline of how Fed's first ever press
briefing will go: "policy statement released at about 12:30 p.m. EDT,
expect no change in the format of the statement; Statement should read
similar to that of 15 March: "maintaining existing policy of reinvesting
principle payments"; commit to complete $600b purchase program by the
end of June; retain language of continuing to "regularly review."
Press Briefing: start at 2:15 p.m. - expected to last about 45 minutes.
Who will participate: eligible members of the accredited press corps,
may include numerous representatives from regional news organizations,
one participant per media firm. A brief opening statement will likely
recap the 12:30 statement then shift to a longer summation of the new
FOMC forecast. Summary of the FOMC forecast will be released.
Questions will be invited."

Ashraf

From AB of AshrafLaidi.com Staff

China failed to deliver on a weekend revaluation rumour but three other important headlines crossed. 1) Officials said they need to guard against falling U.S. Treasury prices. 2) The PBOCs Zhou said Chinas $3 trillion in fx reserves exceeds a reasonable requirement. 3) The CEO of a state-owned investment company said reserves should be diversified and lowered to $1.3 trillion.

In short, China is threatening to cut its investments in U.S. Treasuries by $1.7 trillion. In comparison, the sum total of Q1 and Q2 is around $2.6 trillion and there is about $14 trillion in marketable debt outstanding. The consequences would be considerable. No surprise then that on Monday the Treasury Dept. announced a US-China meeting for May 9-10 in Washington. We see the Chinese comments as political maneuvering aimed at quieting U.S. calls for a yuan revaluation at those meetings but we also expect some measure of diversification in the near future. This will hurt the USD as we look for them to invest in: a) resources and resource companies b) real estate, especially arable land c) places where their money buys maximum political influence esp. distressed govts. Primary targets will be in the developing world but Australia, Canada and the European periphery will also benefit.


Ashraf