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Fed Concerned About the Chinese Yuan!

by Lawrence Williams, Lawrie on Gold:

With such small moves overnight all global gold markets recorded prices moving only slightly. No conclusions can be drawn from their moves against each other, right now.

The gold price reacted to the stronger dollar while the Chinese Yuan stabilized at slightly higher levels against the dollar.

What we find of note is that in the Fed minutes concerned was expressed, “because of unanticipated developments associated with China’s management of its exchange rate.” No such concern was expressed by the moves of the euro or the Yen. Why?

We feel it is because the U.S. Treasury can influence both the euro and the Yen exchange rates, but not the Yuan, as the Yuan and the Chinese economy is not directly influencable by the U.S. As the volume of trade with China is very large, it does affect the U.S. economy.

The current policy of a slow devaluation of the Yuan may well be an important topic at the G-7 meeting going on at the moment.

The dollar index is almost up strongly at 95.30 down from yesterday’s 95.36 The dollar is also stronger against the euro at $1.1219, than Thursday’s $1.1194.

Read More @ LawrieonGold.com

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