Thursday, August 12, 2010

Phil Flynn: Peg Through My Heart!

The Chinese central bank worried about a sharp slowdown as the country took steps to reignite their softening export market. The Peoples Bank of China, according to the Wall Street Journal, set the dollar/yuan central parity rate at a seven week high following the U.S. dollar's broad strength against most major currencies overnight amid concerns about a weakening global economic recovery. The move had the yuan drop sharply against other major currencies and may draw attention from China’s critics that the move will give China a continued unfair trade advantage.

This is especially true after the US trade deficit jumped by a whopping 18.8 percent hitting to $49.9 billion dollars, highest level since 2008. Yet at the same time, China, the great hope for commodity bulls, has some major economic problems on their own. China's growth was at 11.9% and has fallen abruptly to 10.2% in the second quarter. Recent data on Chinese Industrial output reports it fell to 13.4%. China’s real estate bubble is alarming. China has raised interest rates to try to reign in property speculation.....Read the entire article.

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