Archive for china

Chart: Chinese Rate Hike Doesn’t Matter

For the second time this year and the fourth time since 2010, the Chinese government raised interest rates by 25bp, bringing its lending and deposit rates to 6.31 and 3.25 percent. Like many other countries around the world, China is worried about rising inflation pressures and the negative impact that it could have on [...]

Diminishing Impact of Chinese RRR

China raised their reserve requirement ratio today for the third time this year and the ninth time since the beginning of 2010. I don’t have time to write much about this but I want to point out that Chinese is having a diminishing impact on the market.
This is what I wrote last month:
With [...]

China vs. Japan vs. U.S. and Yuan

News that China surpassed Japan as the world’s second largest economy is one of the biggest stories in the financial markets. For more than 4 decades, the only country with a larger economic output than Japan was the U.S. However over the past 20 years, the Japanese economy stagnated, giving China the opportunity to [...]

Impact of Last 3 China Rate Hikes on FX

With each Chinese rate hike, there has been a smaller and smaller impact on the currency market. The first rate hike back in October elicited the biggest reaction because it was the first rate hike in nearly 3 years. At the time, all of the pro-cyclical currencies plunged against the U.S. dollar with [...]

Say Hu? Chinese President Visiting U.S. Next Week

Chinese President Hu will be visiting President Obama next week. Here’s what I think they will say to each other

Whether the timing of the trade surprise was intentional or not, President Hu will be arriving in Washington on January 19th for his official state visit. There is usually no mystery to these significant data surprises. [...]

Impact on FX: What if China Raised Rates?

Everyone is talking about the possibility of China raising interest rates. What if they did? How could it impact currencies?
In October, the PBoC surprised everyone by raising interest rates for the first time since 2007. At that time, we said the central bank rarely makes one off changes and we believe [...]

Reaction to Australian Rate Hike, Outlook for Canada Rate Decision

I was on the Business News Network this morning talking about my reaction to the Australian rate hike, the IMF’s report on Chinese Yuan undervaluation and my outlook for the Canadian rate decision
Click on image to access the video

FT on the Massive Dollar Carry Trade

The Financial Times carried a long article yesterday by Peter Garnham on the fears for the future of the dollar carry trade. The key takeaway from the article is that China estimates the dollar carry trade to be $1.5 trillion compared to an $1 trillion that was put into the Yen carry trade (the [...]

China’s Dollar Trap

Here is a very well written article about China’s predicament with the U.S. dollar and explains why they won’t be talking down the dollar anytime soon:
From the Weekly Standard
The Dollar’s New Best Friend
Beijing warms up to the greenback–because it has to.
by Gordon G. Chang
Last Tuesday, Brazil, Russia, India, and China–the so-called BRIC nations–met in Yekaterinburg, [...]