Originally Posted by RighteousTrader
Everyone Missed It, But China Has ALREADY Retaliated For Last Night's Big Currency Vote In The Senate
Source: Business Insider
Joe Weisenthal | Oct. 12, 2011, 6:04 AM
Things move fast.
Last night, the Senate passed a bill that would impose tariffs on currency manipulators like China.
It's not expected to pass the House or get signed by The President, but China has already responded to the provocation.
As Nomura explains, it fixed the yuan shockingly low against the dollar last night, moving it in the exact opposite direction the U.S. wants:
The disappointing USD/CNY fix today, 116 pips higher than yesterday’s (to 6.3598) and compared with our model forecast of 23 pips could reflect an element of Chinese retaliation to the Senate’s vote. The last time we saw such a big fix (compared to the previous session) was on 29 November 2010 (147 pips), which came on the back of EUR weakness (broad USD strength)
Shamim Adam, On Thursday August 4, 2011, 2:59 am EDT
Just eight months ago, Brazilian Finance Minister Guido Mantega declared a “truce” in competitive currency devaluations. Now, Japanese and Swiss moves to weaken the yen and the franc show reviving tension in foreign-exchange markets as the deteriorating U.S. economy weighs on the dollar.
Japan sold yen today, causing the currency to weaken as much as 3.1 percent against the dollar after rising 5 percent last month. “Ongoing one-sided moves” would hurt the recovery from a March earthquake, Finance Minister Yoshihiko Noda said. Yesterday, the Swiss National Bank cut interest rates to rein in the franc after a gain of about 36 percent in the past 12 months.
Europe’s sovereign debt crisis and the battle between Republican leaders and U.S. President Barack Obama over the budget and borrowing limits drove investors to the perceived safety of yen and francs. The risk of a U.S. return to recession, forcing