User Name: Password:      Register - Lost password?

Forex News Blog
Back to The Headlines
Thursday January 22, 2009 - 23:37:57 GMT
Global Forex Trading -

Share This Story:
| | Email

Forex Research - Obama’s New Strategy on China is USD Negative

Obama’s New Strategy on China is USD Negative

Last Updated 1/22/2009 5:37:07 PM EST (GMT +5)


CURRENT US INTEREST RATE: 0.25% Traders Expect No Rate Hike in January
  1/28 Meeting 3/17 Meeting
NO CHANGE 84.0% 71.8%
Cut to 0.00% 16.0% 15.1%
Increase to 0.50% 0.0% 13.1%
Increase to 0.75% 0.0% 0.0%


The US dollar and the Japanese Yen, the two lowest yielding G10 currencies continue to be the two best performing.  It is important to remember that the dollar and the Yen are not rallying because investors have grown more optimistic about those currencies but because they are more pessimistic about the outlook for the US and global economy. We have seen an unusual amount of currency related comments made by central banks and government officials around the world because of the sharp rally in the dollar and the Japanese Yen.  As these currencies continue to rise, the risk of a reversal grows.  Tim Geithner has been confirmed as the new US Treasury Secretary but rather than cheer his confirmation, analysts are worried about some of the comments he made at his confirmation hearing.  

Obama’s New Strategy on China is USD Negative

According to Geithner, the Obama Adminstration will be saying goodbye to the buddy versus bully approach to China.  He believes that Obama will "aggressively try to change Yuan policy" and that China will no longer get a free pass in trade violations. Geithner even went one step further by saying that Obama believes that China is "manipulating" its currency.  Many people fear that this is rookie rookie mistake.  China does not readily succumb to political pressure.  That is why former Treasury Secretary Paulson allowed China to appreciate the Yuan on their own terms. To a large degree this strategy has worked because over the past 3 years, the Yuan has risen more than 15 percent.  This is a bad time to ask for Yuan strength because growth in China has slowed materially.  To force China to appreciate its currency means less demand for US Treasuries and US dollars and unfortunately that is not something the US can afford right now when the government needs to spend its way out of recession.  Furthermore, turning up the heat on China could lead to an economic war.   Geithner also reiterated that the US has a strong dollar policy which interestingly enough runs completely counter to his calls for a stronger Chinese Yuan.  Like his predecessors, Geithner is doing nothing more than paying lip service to the strong dollar policy because in reality he is advocating a weaker dollar against one of the country’s largest trading partners.  In addition everything that the US government has done so far to address the economic crisis leads to a weaker dollar.  So there is no real meat to Geithner’s comments on the greenback; the Yuan on the other hand is completely different story.  

Dollar Strength Poses Major Risks

The stronger the US dollar becomes, the more pressure it puts on major central banks like the Bank of Japan, the Bank of England and possibly even the Federal Reserve to take action.  In a normal economic environment where growth is steady or improving, central banks may not be compelled to intervene in the currency market but if the Yen continues to fall and Japanese corporations start exerting pressure on the BoJ, we could see the first physical intervention in more than 4 years.  The UK is already receiving pressure from its French neighbors who want them to stop the pound from falling. As for the US, a strong dollar hurts more than it helps and that could lead to some pointed comments from Bernanke who could criticize the deflationary impact of a strong currency.  Switzerland has already warned about currency intervention and if the BoJ, BoE, ECB or Fed talk currencies as well, we could see a significant reaction in the US dollar.   Jobless claims and housing starts highlight the seismic challenges facing the US economy.  Jobless claims hit the highest levels since 1982 while housing starts and building permits hit a record low.


After yesterday’s dramatic intraday recovery in the British pound, the currency is having a tough time extending its gains.  Underscoring the weak conditions in the UK were more disappointments in economic data.  The CBI industrial trends survey which measures factory orders fell to the lowest level since 1992 while home repossessions in the third quarter rose 92 percent from the year prior.  Technically, the UK economy is not currently in recession but as of tomorrow, the recession should be official.  In the third quarter growth contracted by 0.6 percent and in the fourth quarter, GDP is expected to fall by another 1.2 percent.  The trade deficit increased in the last 3 months of the year while consumer spending slowed and unfortunately the Bank of England expects the weakness to continue.  With the economy headed for its first recession in 17 years, more interest rate cuts are expected.  In addition to the GDP report, retail sales are due for release which should fall as well.  With the market so bearish British pounds, disappointing economic data could lead to another round of selling.  


The euro was virtually unchanged against the dollar due to a lack of influential economic data. French consumer spending on goods contracted by a larger amount than anticipated, as a rise in unemployment contributed to the decline. Consumer spending which counts for 15% of the economy helped France dodge a recession in third quarter, but will not contribute to the same outcome as the economy is expected to contract by 1.1% in the fourth quarter. Portugal joined Greece and Spain in becoming the latest country to be downgraded in their credit rating by S&P. The following puts more pressure on ECB to lower their interest rates in the near future. Nevertheless, ECB President Jean-Claude Trichet stated that he will be reluctant to take the rates to zero as he does not expect inflation to stay at low levels for considerable amount of time. Industrial Orders within Euro-zone continued to depreciate reflecting a rapid contraction within manufacturing sector, which could spill into more problems for the region as a whole. The current devaluation of the Ruble by Russian Central Bank might play in some favor for the euro, as Russia will be net buyer of the currency. Tomorrow, Germany and Euro-zone is expected to release its PMI purchasing and services which all are expected to contract. With a decrease in the manufacturing sector and a rise in unemployment throughout Europe, the ECB will be expected to bring the interest rates down to 1.5% at the March meeting.  


The commodity pairs were mixed in today’s trading with the greenback appreciating against Australian and New Zealand Dollar, while losing ground against the Canadian Dollar. The Canadian Dollar shrugged off negative economic news today as retail sales fell the most in more than a decade while leading indicators contracted for the 4th consecutive month.  Even more surprisingly the Canadian Dollar appreciated as the government announced that it will post first budget deficit in more than a decade. The Canadian economy is expected to shrink 0.4% this fiscal year as demand for big ticket items has declined both, domestically and abroad. According to the Bank of Canada, lack of exports will shave off 2.6% points from GDP this year, before rebounding in 2010 as weaker currency and a rebound in U.S. demand will spur the economy by 3.8%, an optimistic view for most analysts. Tomorrow, Canada will release CPI which expected to contract, but deflationary fears were negated as a concern by Finance Minister Jim Flaherty.  The Australian government stated that they may establish a fund lending directly to companies, if foreign banks should fail to contribute $49.5 billion in loans. The funds will be available if foreign banks withdraw from the Australian markets while national banks can not cover the required loans. The following policy will counteract for a shortfall in credit that may push the economy into recession for the first time in nearly 20 years. New Zealand’s Performance PMI rebounded to 42.5, but the report still signals that the economy is shrinking. Australia is set to release its figures for Export/Import Price Index tomorrow, while New Zealand does not have any economic news on the agenda.  


In the US dollar portion of our commentary, we talked about how pressure on China to revalue the Yuan is dollar negative.  However it is also Yen positive.  One of the main reasons why Japan has not intervened in the Yen since March 2004 is because they wanted to give China the floor to appreciate their currency.  China may have balked if Japan was weakening theirs at a time when China was asked to strengthen theirs.  If Geithner or Obama is successful in getting China to agree to a stronger Yuan, one of the more immediately consequences could be a stronger Yen.  The Japanese Yen has long been a proxy for Asia and as a competitor to China in global trade a stronger Yuan would reduce the need for a stronger Yen.  The report that could brand China as a currency manipulator does not come out until April, so we have a few more months before Obama will consider drastically changing the US’ strategy towards China.  Meanwhile, the Bank of Japan kept interest rates unchanged at 0.1 percent last night.  In an effort to add liquidity to the financial system, the BoJ announced that they are considering buying corporate bonds.  Economic data remains weak with the trade deficit widening and exports plunging.  This has forced the BoJ to reduce their growth forecasts.  They now expect growth to contract 1.8 percent in the fiscal year ending in March and by 2 percent next year.  

GBP/USD: Currency in Play for Next 24 Hours

The currency in play for the upcoming 24 hours will be GBP/USD. The UK is expected to release its figures for GDP and Retail Sales at 9:30GMT or 4:30AM EST, which should guide the movement of the pair drastically. After a rapid selloff to a 7 year low the pair has rebounded modestly, although still lingering within the Sell Zone established through the Bollinger Bands. Support is placed at 1.3620 which is the low reached yesterday, as well as a lowest level in 2001. As the pair seems oversold for the time being, the resistance is originating at 1.4250. Resistance represents first standard deviation of the Bollinger Bands; if it is broken the pair will negate the sell zone and could continue to appreciate. Further, resistance coincides with a base of down sloping triangle which was breached earlier in the week. With influential economic data coming from the U.K. resulting in an increase of volatility, either of the levels could be tested.

About The Author

Lien has extensive knowledge within the interbank market, particularly in trading spot FX and options. She has written for numerous publications, is frequently quoted on financial media outlets, and is the author of several books, including Millionaire Traders. Read more >>

DISCLAIMER: This forum and the information provided here should not be relied upon as a substitute for extensive independent research before making your investment decisions. Global Forex Trading is merely providing this column for your general information. This forum and its information does not take into account any particular individual’s investment objectives, financial situation, or needs. All investors should obtain advice based on their unique situation before making any investment decision based upon this forum or any information contained within. In addition, any projections or views of the market provided by the author may not prove to be accurate. Global Forex Trading and Kathy Lien will not be responsible for any losses incurred on investments made by readers and clients as a result of any information contained in this column. Global Forex Trading and Kathy Lien do not render investment, legal, accounting, tax or other professional advice. If such advice is sought, or other expert assistance is required, the services of a competent professional should be sought.



Forex Trading News

Forex Research

Daily Forex Market News
Forex news reports can be found on the forex research headlines page below. Here you will find real-time forex market news reports provided by respected contributors of currency trading information. Daily forex market news, weekly forex research and monthly forex news features can be found here.

Forex News
Real-time forex market news reports and features providing other currency trading information can be accessed by clicking on any of the headlines below. At the top of the forex blog page you will find the latest forex trading information. Scroll down the page if you are looking for less recent currency trading information. Scroll to the bottom of fx blog headlines and click on the link for past reports on forex. Currency world news reports from previous years can be found on the left sidebar under "FX Archives."

Actionable trading levels delivered to YOUR charts in real-time.

Register To Test Your Amazing Trader

GVI Trading. Potential Price Risk Scale
AA: Major, A: High, B: Medium

Tue 17 July 2018
AA 08:30 GB- Employment
A 13:15 US- Industrial Production
AA 14:00 US-Powell Testimony
Wed 18 July 2018
AA 08:30 GB- CPI
A 12:30 US- Housing Starts/Permits
AA 14:00 US-Powell Testimony
Thu 19 July 2018
AA 1:30 AU- Employment
AA 08:30 GB- Retail Sales
A 14:30 US- EIA Crude
A 12:30 US- Weekly Jobless
Fri 20 Jun 2018
A 12:30 CA- CPI/Retail Sales

John M. Bland, MBA
co-founding Partner,

Global-View Affiliate Program

We are starting an affiliate program to market some of our products.

Send me an email if you would be interested or if you know someone who would like to be an affiliate. Generous commissions payout for those accepted.

Put the word "affiliate" in the email subject line.

Contact us

Start trading with forex broker Markets Cube

Max McKegg's Daily Forex Trading Forecasts

Veteran FX Trader, Max McKegg, forecasts all the Major currencies and the Australasians; providing Daily and Medium Term Trading forecasts to subscribers, who include large Banks the world over, as well as individual traders in more than 30 different countries.

Request a TRIAL of Max's Forex Service.


Retail Forex Brokerage Changing!

Are you looking for your first broker or do you need of a new one? There are more critical things to consider than you might have thought.

We were trading long before there were online brokers. Global-View has been directly involved with the industry since its infancy. We've seen everything and are up-to-data with recent regulatory changes.

Our Best Brokers listing section includes:Forex Broker Reviews, Forex Broker Directory, Forex Broker Comparisons and advice on How to Choose a Forex Broker

If would like guidance, advice, or have any concerns at all ASK US. We are here to help you.

SEE Our Best Brokers List

Currency Trading Tools

  • Live rates, currency news, fx charts. 

  • Research reports and currency forecasts.

  • Foreign Exchange database and history.

  • Weekly economic calendar.

Directory of  Forex trading tools

Terms of Use    Disclaimer    Privacy Policy    Contact    Site Map

Forex Forum
Forex Trading Forum
Forex Forum + forex rates
Forex Forum Archives
Forex Forum RSS
Free Registration

Trading Forums
Currency Forum Guide
Forum Directory
Open Forum
Futures Forum
Political Forum
Forex Brokers
Compare Forex Brokers
Forex Broker News
Forex Broker Hotline

Online Forex Trading
Forex Trading Tools
Currency Trading Tools
Forex Database
FX Chart Points
Risk/Carry Trade Chart Points
Economic Calendar
Quicklinks to Economic Data
Currency Futures Swaps
Fibonacci Calculator
Currency Futures Calculator

Forex Education
Forex Learning Center
FX Trading Basics Course
Forex Trading Course
Forex Trading Handbook

Forex Analysis
Forex Forecasts
Interest Rate Forecasts
Central Bank Forecasts

FX Charts and Quotes
Live FX Rates
Live Global Market Quotes
Live Forex Charts
US Dollar Index Chart
Global Chart Gallery
Daily Market Tracker
Forex News
Forex Blog
Forex News
Forex Blog Archives
Forex News RSS
Forex Services
Forex Products
GVI Forex
Free Trials
FX Bookstore
FX Jobs and Careers
Jobs USA
Jobs UK
Jobs Canada

Forex Forum

The Global-View Forex Forum is the hub for currency trading on the web. Founded in 1996, it was the original forex forum and is still the place where forex traders around the globe come 24/7 looking for currency trading ideas, breaking forex news, fx trading rumors, fx flows and more. This is where you can find a full suite of forex trading tools, including a complete fx database, forex chart points, live currency rates, and live fx charts. In addition, there is a forex brokers directory where you can compare forex brokers. There is also a forex brokers hotline where you can ask for help choosing a forex broker that meets your individual fx trading needs. Interact on the same venue to discuss forex trading.

Forex News

The forex forum is where traders come to discuss the forex market. It is one of the few places where forex traders of all levels of experience, from novice to professionals, interact on the same venue to discuss forex trading. There is also the GVI Forex, which is a private subscription service where professional and experienced currency traders meet in a private forex forum. it is like a virtual forex trading room. This is open to forex traders of all levels of experience to view but only experienced currency tradingprofessionals can post.

Currency Trading

Currency trading charts are updated daily using the forex trading ranges posted in the Global-View forex database. You will also find technical indicators on the fx trading charts, e.g. moving averages for currencies such as the EURUSD. This is another forex trading tool provided by

Forex Brokers

The forex database can be used to access high, low, close daily forex ranges for key currency pairs, such as the EURUSD, USDJPY, USDCHF, GBPUSD, USDCAD, AUD, NZD and major crosses, including EURJPY, EURGBP, EURCHF, GBPJPY, GBPCHF and CHFJPY. Data for these currency trading pairs dating back to January 1, 1999 can be downloaded to an Excel spreadsheet.

Forex Trading

Forex chart points are in a currency trading table that includes; latest fx tradinghigh-low-close range, Bollinger Bands, Fibonacci retracement levels, daily forex pivot points support and resistance levels, average daily forex range, MACD for the different currency trading pairs. You can look on the forex forum for updates when one of the fx trading tools is updated.

FX Trading

Global-View also offers a full fx trading chart gallery that includes fx pairs, such as the EURUSD, commodities, stocks and bonds. In a fx trading world where markets are integrated, the chart gallery is a valuable trading tool. Look for updates on the Forex Forum when the chart gallery is updated.

Forex Blog also offers a forex blog, where articles of interest for currency trading are posted throughout the day. The forex blog articles come from outside sources, including forex brokers research as well as from the professionals at This forex blog includes the Daily Forex View, Market Chatter and technical forex blog updates. In additional to its real time forex forum, there are also Member Forums available for more in depth forex trading discussions.



By using this website, you are agreeing to our Privacy Policy and Terms of Use, and Cookie Policy

Copyright ©1996-2014 Global-View. All Rights Reserved.
Hosting and Development by Blue 105