In This Issue Currencies are rallying VS the

first_imgIn This Issue. * Currencies are rallying VS the dollar. * Iron ore prices rally for two days. * China talks more RRR cuts. * Martin Weiss talks BRICS! And Now. Today’s A Pfennig For Your Thoughts. Let The Dovish Talk Begin. Good day.. And a Wonderful Wednesday to you! Well, no new baby news, no Luke and Lara updates, and the Cardinals broke the bats out last night. That’s about it, thank you and have a great day!   Well, there’s something else going on today, that everyone, but me, is all lathered up about, and that’s the end of the FOMC Meeting, which will have a statement by Janet Yellen in which every word, and the tone in which she said the word will be scrutinized by the markets. I usually don’t get all that “into” what they say, it’s what they do that drives me crazy. But in the end, I believe the talk will be dovish, as the Fed begins to grease the tracks for the no-move in June. Well, yesterday was quite the day for the currencies, and even Gold got into the banging on the dollar as the day went along. But that was yesterday. Overnight we’ve seen some profit taking, as the currencies have had quite a run on the dollar lately. The Aussie dollar (A$) traded over 80-cents yesterday, just a couple of weeks ago, the A$ was trading below 76-cents. The Canadian dollar / loonie a couple of weeks ago was trading with a 79-cent handle, and yesterday the loonie reached 83-cents..  So those are just a couple of examples of the currency moves, before of the past couple of weeks, before last night’s profit taking. The British pound sterling and the euro are two currencies that are adding to their gains the past couple of weeks.  But the best performer overnight is the Swedish krona, and this rally came about because the Riksbank left rates unchanged, when a rate cut was all but considered to be a done deal. You may recall that Sweden already has negative rates -.25%, but the Riksbank decided against digging the hole deeper. All the short krona trades based on the thought that a deeper hole would be dug with negative rates, had to be reversed, and that has led to a huge move for the krona overnight. We’ll get two Central Bank decisions tonight. One from the Brazilian Central Bank (BCB) and the other from the Reserve Bank of New Zealand (RBNZ).  I suspect that the BCB will hike rates one more time to close out this rate hike cycle and bring their internal rate to 13%… While the markets and economists are on the fence about what the RBNZ will do at their OCR Review this evening. OCR is the Official Cash Review, where interest rates will be discussed. I think the RBNZ is going to grease the tracks for what they feel is needed, a rate cut  at a future meeting. If they do, kiwi should take cover, for the selling might be harsh. The Chinese renminbi / yuan was allowed to appreciate again last night, and the renminbi is now trading below 6.12 spot. The renminbi has been bucking the trend of currencies getting weaker VS the dollar, by holding Steady Eddie, and when it came time to appreciate with the other currencies, it did so. I think this is a scenario we can count on going forward, as the Chinese want to show the IMF that the currency can be stable. I was directed to a report that was filed on Monday by a JC Collins titled: When Will China End The Dollar Peg? And it appeared on the website:    And while technically, it’s not correct, the renminbi / yuan is not pegged directly to the dollar, but instead to a basket of currencies of which the dollar is a part of, the thought here is about dropping the peg to the basket, although the writer refers to the basket as the “dollar” throughout the article. And in the article was something that I had not thought of. So, let me set this up for you.  I’ve told you for over a month now that China was going to make a presentation to the IMF to get the renminbi / yuan included in the Special Drawing Rights (SDRs ) that the IMF uses, that includes: dollars, euro, yen and pounds. I’ve already talked about how at this presentation the Chinese might actually disclose the true balance of their Gold reserves. But in addition to that. I was not aware that the IMF is not going to allow the renminbi to be included in SDRs if it is still pegged to the basket of currencies.  So, we could actually see the renminbi float by the end of next month! WOW! And all those naysayers out there said it would never be done! Well, if this is all on the up and up, we could well see the managed currency peg dropped, and the renminbi float. Of course that would be a managed float, the Peoples Bank of China (PBOC) would still have a lot of say in the direction of the currency, but the currency could trade outside of the current bands it is required to stay within. That would inject volatility into the currency, something we’ve never really seen, although the PBOC attempted to make the renminbi more volatile last year. Just another step, although this would be a tall step and not the baby steps the Chinese have been taking since 2008 to remove the dollar as the reserve currency, and push their currency as the replacement to the dollar. Are you ready? This is going to get really exciting..  And it’s moving faster than I imagined. Gold added to its gains from the previous day yesterday, but is down $6 this morning but still above $1,200. Our metals guru, Tim Smith, sent me a link to an article on the web that explains the $22 gain in Gold on Monday. I have it here in case you want to read the whole article.” alt=”last_img” />

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