Yuan Hits All-Time High Vs. The Dollar

By Tom Luongo in Currency Articles | October 11, 2012 23:20 | Tags: , , , ,

Slowly but surely the Federal Reserve and the U.S. Treasury Department are getting what they want, a weaker U.S. Dollar (AMEX:UUP).  If you were to watch the trade-weighted USDX you might not see it as it is being managed on practically a tick for tick basis these days.  Headlines are timed to ensure that the Euro and the Yen move only so far during the days leading up to the U.S. Presidential election.  Between the utterly unbelievable unemployment claims number from this morning and the non-farm payroll report from the BLS on Friday the idea of a strengthening U.S. economy has been sold to the barely aware mass of taxpayers just in time for early voting.

But that is belied by the plunge in the USDCNY (Chinese Yuan) pair today.  The Yuan hit an all-time low of 6.278 versus the Dollar this afternoon which implies a either a stronger Chinese economy, in which case it calls into question the employment figures, or a weaker U.S. Dollar which also implies bogus employment figures because why would the U.S. have to engage in QEternity if the labor market somehow took a left turn at Albuquerque?

It is conundrums like these that are designed to rob you of your reason and make you question what is staring you in the face, that none of the data we are being presented with in these the most politicized of days bears any resemblance to reality.

About Tom Luongo
Tom is a professional chemist and self-taught economist who has been following and trading stocks for nearly 12 years. He has no formal ties to the financial industry and considers that an asset in his analysis of the interplay between monetary policy and capital markets.


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