This is a chart detailing the Dollar against the Chinese Yuan.

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There is a very interesting story from Dow Jones this AM detailing the collapse in Bitcoin. The story notes that after bitcoin came within a whisker of a record high on some exchanges, it collapsed more than 20% within hours.

The Chinese yuan was behind the move as that currency hit its highest level since November after the People’s Bank of China decided to drive the yuan higher.

China is a big source of demand for bitcoins.

For whatever reason, the Chinese authorities apparently decided that the Yuan was weakening too much and stepped in.

This seems to be the catalyst behind the Dollar selloff that we are seeing this morning. Funds have wasted no time in attacking the Dollar as a result.

As previously stated, every single bit of this could reverse tomorrow morning with a strong payrolls number. Things are becoming a crap shoot at this point.

Be careful and do not get carried away.

 

Comments (3)

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Hi Dan,
Based on earlier data that China lowered their US Treasury holdings significantly in recent months – resulting in lower rates, higher yields -, it seems they exchanged the collected USD with CNY to revalue it.
In case the new exchange rate is OK for China and US, a new “balance” is realised for the time being and we may see a pressure on bond yields again.
At least I hope, as I bought 10YR’s at 2,6%. A value in the area of 2.5-3.0, being a risk-value for many lenders and therefore also for the economies according messages of several banks (Saxo, etc.).
And as there is everywhere a lot of economic optimism, not only in your US due to Trump but also here in Europe (please see the consumer confidence figures), these is according to me still a correction possible on the yield-rates. And accordingly I acted by buying bonds and staying extremely careful with equities.

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