Archived IMT (2010.10.15)

THE OTHER IMPORTANT EVENT TODAY Aside from the Bernanke speech, which will come out 15 minutes before the US retail sales & CPI reports, the US Treasury may publish its SEMI-ANNUAL CURRENCY REPORT, possibly labelling China as a currency manipulator. The reports official release dates are April 15 and October 15, but it is almost always delayed by 1-2 months. The Treasury has been pressured and criticised by Congress for never naming China as a currency manipulator. In the UNLIKELY event that it does, this would effectively declare a currency war on China. RUMOURS OF A DEAL involving the US delaying the report or not naming China as manipulator IN EXCHANGE for China either revaluing the yuan or allowing it to appreciate faster. As part of any deal, CHINA WOULD NEED THE FED TO ISSUE LESS QE (purchase less treasuries) in order to alleviate the downward spiral of the USD. These talks are a strong reason to the consolidation seen in Thursday FX markets involving USD bounce and yen declines. The quick long call FAVOURING GBPCAD IN THE LAST IMT at 1.5980s followed a 110-pip gain, now reaching the 1.6110 trend line resistance. But the bulish hammer and positive stochasticks are likely to extend further gains ahead to as high as 1.6180.