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Asian Support of the Greenback or Bust |
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Sound familiar? You have spent years surfing the 'Net, and studying books and charts in search of currency trading strategies or forex trading strategies. All you really want is the 'Holy Grail' of entry techniques. You usually end up adding one indicator on top of another, switching from one guru to the next, until you are so confused and unsure of your entry system that you are unable to make entry decisions and stay organized. You get so distracted and frustrated that you quit watching the markets all together! Shows you how FAST you can make money when the BIG DOGS make their move - by shamelessly copying this winning group . Even I am STILL surprised by how much power they have over the currency markets. September 25, 2004 US$249 billion of the U.S.’ US$531 billion current account deficit has been purchased mostly by Asian countries, which now have unprecedented foreign reserve holdings of US$2 trillion (Japan has US$767.1 billion, China US$430.2 billion and Taiwan US$225 billion). Is the buying of massive amounts of U.S. current account debt sustainable? Will the Asian countries suddenly sell off their greenbacks? A global financial catastrophe in the making? A financial crisis would most certainly cause interest rates to rise. Scary for a country like Canada where the loonie is on the rise. Talking heads peg it at 85 or even 95 cents at some point in the foreseeable future. Bad news, given that Canada’s productivity rate is only 65 or 70 percent that of the U.S. China is accumulating U.S. dollars to keep its own currency (the Yuan) undervalued. The U.S. is going along with this on the premise that China has huge reserves, and doesn’t need extra cash in the form of higher taxes on U.S. companies. Japan started intervening in the foreign exchange markets in January, 2003 and then suddenly stopped on March 16, 2004 – presumably because the BoJ ran out of money – and for once was unable to give any surplus to the government. Bottom line, too many U.S. assets are in foreign hands for the buying to stop or the unloading to begin. And, let us not forget that these Asian countries need the American consumer for the very own survival. So, not to worry just yet. On the flip side, a buildup in reserves threatens price stability for the American dollar. What might the U.S. do? Well, if history repeats itself, the U.S. could enact another version of the Gramm Rudman Act of 1985, which set targets for eliminating the federal deficit by 1990. Provisions included automatic cuts in domestic and defense spending, if they weren’t made voluntarily. And, the U.S. could move to stop Asian intervention in exchange rates. What are the implications for the Asian countries in question? Well, there’s the risk of not being diversified into other currencies, and pressure could build in those countries to move away from a dollar-based system. A very interesting story indeed. Stay tuned. (Source: Times Colonist) When it comes to currency trading strategies or forex trading strategies, you will find a whole lot more in my internationally acclaimed course at ... "Free" personal consultation with each purchase "No-Games, No-Strings" Money Back Guarantee Even experienced traders know they have more to learn. No matter what currency you're in, whether your preference is euros, yen, the franc or the pound, whether you're a beginner who needs a concrete plan or a seasoned trader, or simply looking for information on how to use the right data, you've come to the right place. Most traders who come to us just want to know how to trade currencies against the 'dumb money,' and ... How To Make A Full-Time Income Trading Less Than Part Time Find out what a blind, three-legged dog with
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