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WEAK DOLLAR KEY
last Friday, China launched DCEP, ECB turned hawkish. Add rocketing US rates driven by huge NDP, AHE & CPI, Yet #Dollar down*. We know a weaker dollar is supportive 'risk'. IMV its driven by #PBOC selling dollars. China's #CFETS basket at 2 Year highs correlates
last Friday, China launched DCEP, ECB turned hawkish. Add rocketing US rates driven by huge NDP, AHE & CPI, Yet #Dollar down*. We know a weaker dollar is supportive 'risk'. IMV its driven by #PBOC selling dollars. China's #CFETS basket at 2 Year highs correlates
with $DXY strength. DCEP is now up & running and the $RMB strength necessary to its survival & credibility is no longer necessary, indeed its harmful. A strong $RMB was essential to avoid the loss of credibility endured by the only other reserve currency launched in the last 100
years. Long time FX people will remember the still born launch of the Euro, which crashed and required G7 intervention to stabilise it. This is a luxury China doesnt have, so it was essential to keep the currency strong before its launch to avoid a similar loss of credibility.
