Forex

by Larry Levin

It looks as if the Forex markets will be driving equities this week. China has decided to drop its Yuan currency peg to the dollar.

From Bloomberg...

http://www.bloomberg.com/news/2010-06-21/stocks-commodities-surge-after-china-signals-end-to-peg-dollar-weakens.html

Asia shares, U.S. stock index futures and commodities surged after China signaled it will unshackle the yuan’s fixed rate to the dollar, boosting investor confidence. Yuan forwards strengthened to a seven-week high.

The MSCI Asia Pacific Index vaulted 2 percent to 118.44 at 11:23 a.m. in Tokyo. Standard & Poor’s 500 Index futures advanced 0.8 percent. Oil for three-month delivery increased 1.2 percent to $78.10 a barrel. Three-month non-deliverable forwards strengthened 0.5 percent to 6.7475 per dollar. That implies that currency traders are betting on a 1.1 percent appreciation.

The People’s Bank of China said it may allow the yuan to move higher, boosting demand for nations who sell products to the world’s third-largest economy. The central bank indicated it’s abandoning the 6.83 yuan peg to the dollar adopted during the global financial crisis to shield exporters. American lawmakers had argued that the yuan peg was an unfair subsidy for China’s exporters. A stronger yuan may help policymakers stanch inflation without strapping the fastest-growing major economy.

"The yuan policy shift is bullish for commodities that China needs to import and bearish for those it exports," Li Qiang, managing director of Shanghai JC Intelligence Co., said in a phone interview. ’’But the process will be gradual and most of the impact will be on investor sentiment.’"




Previous Day's Trading Room Results:

Trade Date: 6/18/10

E-Mini S&P Trades*
(before fees and commissions):


1) Pivot Point sell @ 9:37am at 1116.00 = +.75 & +1.25 (2 lots)

2) Algorithm positions (7)

3) “Reading the Tape” positions (3) …combined Secret’s, Algo, & “Reading the Tape” total +8.50



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