Friday December 15, 2006 - 11:24:24 GMT
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Black Swan Capital - www.blackswantrading.com
â€¢ China and the United States agreed broad steps on Friday to tackle global economic imbalances as two days of talks to ease trade and currency strains ended with good intentions but modest substance. (Reuters)
â€¢ Federal Reserve Chairman Ben S. Bernanke urged China to allow its currency to gain at a faster pace to end ``an effective subsidy'' for exporters. (Bloomberg)
â€¢ Confidence among Japan's largest manufacturers rose to a two-year high in December. (Bloomberg)
â€¢ Key Reports (WSJ):
8:30a.m. Nov Consumer Price Index. Expected: +0.2%. Previous: -0.5%.
8:30a.m. Nov Consumer Price Index, Ex-Food & Energy. Expected: +0.2%. Previous: +0.1%.
8:30a.m. Dec NY Fed Manufacturing Index.. Expected: 17.5. Previous: 26.66.
9:15a.m. Nov Industrial Production. Expected: +0.1%. Previous: +0.2%.
9:15a.m Nov Capacity Utilization. Expected: 82.2%. Previous: 82.2%.
4:30p.m. Money Supply.
"But I can tell you after the market began to go my way I felt for the first time in my life that I had allies - the strongest and truest in the world; underlying conditions."
FX Trading - Tibits
The dollar is on a rollâ€”the yen is getting mashed. Neither a full-court press by the US to force China to allow its currency to appreciate faster, nor seemingly good news from the Tankan survey helped the yen this morning. Is USDJPY 120 in the cards?
CHART: USDJPY Daily
Two days in a row of good news for the buckâ€”do I hear three?
Unlike the yen, the dollar is reacting well to the news, jumping on the surprise of strong retail sales on Wednesday and the better than expected jobless claims number yesterday. That belief in a cut by the Fed in March may be fading quickly. And as you can see, the buck and the bonds are moving in lock-step. The chart below shows 30-year Treasury Bond futures vs. US $ Index inverted (which means going down on this chart is an increase in value).
CHART: US 30-yr T-Bond futures vs Dollar Index (inverted)
Today we get a look at US CPI for November and a look at manufacturing and industrial production. Higher CPI or manufacturing numbers today and the dollar likely chalks up three winning days in a row and make Mr. Bernankeâ€™s much maligned confidence in the US economy (we plead guilty as charged) start to looking increasingly reasonable.
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