Yeah I will give it a shot at some point. But with a very, VERY small position.
Hi FE,
Philip linked to the Iron Ore story on China, but I suspect that the motive for the buying was not an anticipation of increased demand, maybe if a buyer was aware that his currency of purchase was going to devalue, hence his imports costing more, maybe then he would buy some more before the devaluation.
Fact remains that commodities are tied to China, again, as mentioned, Copper is the barometer.
Peston from the BBC figures that the Fed will have to re-think, after all by raising they will add to the Chinese move, clever move by the Chinese - over to the Fed now.
Youâll see the story on forexlive, but also check out car sales:
China Auto Sales Fall to 17-Month Low Despite Price Cuts - Bloomberg Business
Well Iâm happy I bought some AUD but what the hell happened to cause that turn-around? Is it really China selling USD?
Maybe not actually selling USD, but their numbers and actions causing some concern:
First their numbers out this morning:
Chinese industrial production behind expectations - RTďż˝ News
and then their actions also out this morning:
Hi Mike,
i am a bit confused with your aud/jpy trade. Until now you always tried to follow the main trend. This one looks to me bottom catching. Although i guess i should quit talking about my view on what is a trend because Phil jumps at me:-)
Anyway would be interesting to see why you want to look for buyimg on a support level when you have a trend following strategy which definetily not really an uptrend is at least for me.
FE
Hi Phil,
i dont believe a single word for the fed. Please remember since how long is this joke with rate hiking goin on? I believe the first rate expectation was early this year. Since that time every single month the nfp report was said to be crucial. Well with so many nfp report yellen did not manage to say something important in so many meetings. I think if everyone postpones a rate hike, it would be stupid to do it only in the usa. That is an own goal in my eyes. I would expect first a commodity bottom with increasing inflation which is crucial and then finally comes a rate hike.
Maybe Peter can share some wisdom with us.
Take care,
FE
Thatâs actually an interesting point, especially with market expectation leaning towards September for lift-off.
May be a âsurpriseâ that FED doesnât raise in September. We see a rally in gold, silver and oil. And now that makes it easier for the Fed to raise.
It could be.
But their actions on the second time yielded the opposite result compared to the first time. Iâm leaning more towards the idea that the market is having a change of heart about September lift-off.
We know that there is an element of itchy finger with the Fed - the Chinese action should, if economic sense prevails, cause the Fed to re-think.
Like I said, why add to the Chinese action, why create even more of a difference, why make it even easier for them to export.
One other aspect of this scenario, Chinese exports, not only to the US, but also to other countries are being affected by the higher USD - if an importer from the EU requests a quote on manufactured goods from China, he will be quoted and expected to pay in USD - their competitive edge is being eroded.
Hey FE.
Well, I did not say that I was trading the AUD/JPY. Remember that I keep track of everything that goes on, in regards to trends. I was just mentioning it. The only AUD trade I have this week is AUD/NZD. Northward.
Iâm having a fairly good week so far. Went with 19 trades. 12 closed positive, 7 still running. Hereâs the closed ones. This is only about +2% on the account for the week.
The trends seem to be continuing so far. I donât see any real trend changes yet. Especially regarding the Comms.
Mike
Hey guys.
Yeah, what I see as the most interesting movement is the EUR. ManâŚthey are just climbing on up there. And what I see, in print, is that they are being used as a funding currency.
(Iâm not completely sure I understand all of that. Maybe Peter can explain it to me.)
Ok. Funding currencyâŚas opposed to⌠what. Is this something new? Stock piling Euroâs, because of their QE?
And another question for you guys. What, if any, relationship does EUR have with the Chinese?
Are they good to one another? Bad? Or do they even matter to one another?
Mike
Many in EZ say that QE is doing what it is supposed to do - stimulate the economy. So the initial knee jerk back some time ago on QE is gone - not a lot dissimilar to the results of QE in US.
Speaking to an EZ importer last Friday, vast majority of his purchases are from China, he pays his bills in Euro, makes his sales in Euro - he was lamenting the high cost of USD and the effect that it will have on his sales.
What is Funding Currencies? Definition and meaning - InvestorGuide.com
Smart move !
I certainly wouldnât have thought about it 
The comms lost ground at least through Asian and early London session dollar seems to be holding relatively well.
Given the current scenario Peter, do you think pound is (BoE) under a similar pressure as dollar (Fed) ?
The BOE have already felt some pressure on Eur/Gbp - the EZ is their first concern, having said that the current rate is just below the mean, but it feels very low since business was getting used to rates above 78.
If you look at Eur/Usd daily you can see the attempt at a new low in late April failed despite all the Greek problems, many were surprised (and saddened) that Euro resilience didnât appear on Eur/Gbp in June and July, perhaps reflecting recent Gbp strength.
It was around this time that were rumours that the BOE were unhappy with the strength of GBP, which they denied.
Hi Phil,
as gold/silver was pretty much diverging this week from oil, it might be an interesting cot report to analyse. Although the important data might come out only with the next week report.
This weekend i do not have time to analyse but i will catch up with it next week.
FE
Yes. I actually canât understand why the strength in Gold and Silver. Itâs important to note there is no extreme in oil so in terms of COT weâre not seeing anything surprising.
And I mentioned before that Williams himself may be two weeks ago said that Gold was close to a buy based on COT, so we cannot be wrong in our analysis.
Itâs just back to basics, hate keep on harping about China, but this particular writing has been on the wall for a few weeks.
It is the second largest world economy, itâs stock market has been ringing some alarm bells, there has been a sense of⌠well panic⌠not dissimilar in how some of the old traders would have used that word.
In times of panic we are taught from old that there is only one currency to buy.
Hi Peter,
now that is very interesting. I guess the 1 currency is gold.
I think it was Williams and others who showed with technical analysis and historical proof how misbelief it is that gold rallies in uncerntainty. Inflation yes, but many do not consider gold as a hedge for panic. What do you think?
FE
Hi FE,
Today the word âpanicâ has a different connotation, it used to mean a time of change, a sharp pull back or a time of uncertainty for the market as a whole.
Murphy on Gold from 2001:
[I]"It seems clear that the bear market in stocks starting in 2000 helped usher in a new bull market in Gold assets.
At the time some skeptics questioned the staying power of the Gold rally on the grounds that Gold was an inflation hedge and there was more deflation than inflation. What they didnât realize is that historically Gold has done well in both inflationary and deflationary periods."[/I]
Murphy then goes on to document those periods from the great depression onwards.
[I]Referring to the last 20 years of 20th century âIt was no accident that at the end of the 20 year bull market in stocks coincided almost exactly with the ending of the 20 year bear market in Gold. The combination of the start of the worst bear market in stocks since the Great Depression and another devaluation in USD a couple of years later made Gold the worldâs strongest assetâ.
[/I]
Murphy is showing that the Gold market is an alternative investment market that investors will go to in times of âneedâ, if the need in inflation, since it erodes return or if it is a falling stock market or a falling USD.
[I]
âOne of the main tasks of chart reading is to determine if a trend change is a relatively minor one or if it represents a major shift in the direction of any market.â
[/I]
He then suggests the use of two related markets in helping such determination.
[I]" Recall that a falling Dollar is bullish for Gold. If Gold is starting to rise, the first thing to do is determine if USD is starting to drop. The next thing to do is look at separate charts of each market to determine the importance of their respective trend changes".
[/I]
Page 50 -51 âTrading With Intermarket Analysisâ by John J Murphy.
Hi Peter,
thanks for the informative post. That was an expert analisys on intermarket correlations! Well, checking the mentioned options, USD is not falling and there is no inflation. However stock market seems weak. Guess there is a reason why it is not easy to trade gold these days.
Have a nice Sunday everyone,
FE