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Dollar Deepens Dive as Caution on Currency Grows
Sanguine:
--- Quote ---By Kenan Machado
Sept. 8, 2017 4:32 a.m. ET
The dollar was hit by fresh selling in Asian trading Friday, a day after notching a 2½-year low, as reasons for caution on the currency continued to mount.
The Wall Street Journal Dollar Index was off 0.4% in Asia to 84.38, putting it down 9.2% for the year.
Thursday’s 0.7% drop was part of a broader move by investors into haven assets such as gold and government debt—a dollar “capitulation trade,” said Rob Rennie, currency-strategy chief at Australian bank Westpac . It was fueled in part by the European Central Bank, which raised growth forecasts and thus spurred the euro.
The action highlighted how market sentiment has shifted as 2017 has progressed. The year began with high investor hopes that the Trump administration’s program of infrastructure spending, tax overhaul and regulatory cutbacks would cause long-muted U.S. growth to accelerate.
But the enthusiasm has waned as months pass without legislation, despite Republican control of not just the White House but Congress.
.....
“The dollar can’t find any loving at the moment,” said Rodrigo Catril, a foreign-exchange strategist at National Australia Bank in Sydney. Given the unresolved fiscal issues in the U.S.—debt-ceiling measures “kicked down the road again”—and political wrangling between President Trump and his own party, he adds, it isn’t hard to understand why.
Write to Kenan Machado at kenan.machado@wsj.com
--- End quote ---
https://www.wsj.com/articles/dollar-deepens-dive-as-caution-on-currency-grows-1504859572
Free Vulcan:
--- Quote ---But the enthusiasm has waned as months pass without legislation, despite Republican control of not just the White House but Congress.
--- End quote ---
Congressional inaction has consequences.
Smokin Joe:
The move against the dollar as the reserve currency has begun:
https://asia.nikkei.com/Markets/Commodities/China-sees-new-world-order-with-oil-benchmark-backed-by-gold
China sees new world order with oil benchmark backed by gold
--- Quote ---China is expected shortly to launch a crude oil futures contract priced in yuan and convertible into gold in what analysts say could be a game-changer for the industry.
The contract could become the most important Asia-based crude oil benchmark, given that China is the world's biggest oil importer. Crude oil is usually priced in relation to Brent or West Texas Intermediate futures, both denominated in U.S. dollars.
--- End quote ---
(more at the link)
Free Vulcan:
--- Quote from: Smokin Joe on September 08, 2017, 03:48:43 pm ---The move against the dollar as the reserve currency has begun:
https://asia.nikkei.com/Markets/Commodities/China-sees-new-world-order-with-oil-benchmark-backed-by-gold
China sees new world order with oil benchmark backed by gold (more at the link)
--- End quote ---
I believe you are correct. It has been coming for some time.
Smokin Joe:
--- Quote from: Free Vulcan on September 08, 2017, 03:50:49 pm ---I believe you are correct. It has been coming for some time.
--- End quote ---
Yep. When the Chinese were buying gold and mineral contracts around the world, the writing was on the wall. They also opened up private ownership of gold there, and likely that can be rescinded like here in '33, which gives them enormous reserves to work with that aren't official, should they decide to tap them.
Officially, they have the 5th place gold reserves in the world. https://www.forbes.com/sites/greatspeculations/2016/05/26/top-10-countries-with-the-largest-gold-reserves/#3a5709f1730a
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