Currencies Are Talking

There are many indicators out there to help you navigate the stock market and inform you of the strength of your economy. These oscillators however do not behave the same way under market conditions. In a bull market whenever an overbought or oversold oscillator is indicated, the stock immediately bounces in the other direction. In a bear market, there is no effect. There are however, other more reliable indicators. Currencies is right at the top. Some people look to interest rates, but whatever the rate, there will be a ratio exchange value with the currency involved.

Top Currencies

The US leads since America is not only the largest economy, but also many commodities are only exchanged in dollars like oil not to remind you that it still is the world's reserve currency. Recently, some nations like China and Russia will transact an exchange through euros or gold. This is a small change, but other reasons for circumventing the dollar are out there. One central to emerging markets is financing. They would like another source like a shopper seeking a lower price on a product. There is nothing wrong with that approach except looking beyond the purchase. By complaining about the dollar, a consuming nation for financing forgets that if the dollar was replaced, the alternative could and most probably, be worse. The IMF wants that role. Nothing like bureaucrats running the show and allowing you a say. Not going to happen! You will have no say. Then, there is the ego of the Chinese. Nothing like a corrupt, totalitarian state dictating money policy. You want to try the euro? All you have to do to understand another bureaucratic concern is look at Brexit. The dollar is freedom's best choice. Dear Reader, the role of the dollar in the global community places many hardships on individual Americans. Global nations don't understand this aspect. They only see the for me point of view. At one time when the dollar was good as gold, the poor in America had it great. Not so much anymore. The dollar last Friday was valued at 98.31-cents in relationship to world exchanges.

The next important currency is the euro. Its value on Friday was 110.42-cents in exchanges. The euro has many pluses and minuses for its members. It allows cross border exchanges with equal value, however it helps older, stronger currencies to lower their exporting value at the expense of older, previously cheaper dollars like in Italy or Greece. Keep in mind, this is an experiment in financing. I have put forth my beliefs on the subject. I believe it would be best for Europe to have two currencies. One for the Northern manufacturing economies and one for the warmer, specialty climates.

Central to Europe and the world is the pound. The geopolitical tensions have wiped it up and down. I will digress more on that in a moment. Last Friday the pound rose to 1.26-cents in world trading.

The yen of Japan is also an important exchange since Japan is a leader in exporting. Lately, it has been weakening. It fell to 108.29 last Friday.

The Chinese yuan settled at 7.09-cents on Friday while the Hong Kong fell to 7.84-cents. Generally, they are similar, but tensions on the city effects many things. The trend is cheaper which is par for the course in Asian policy. Government has more control in this region and they manipulate to keep the value cheaper. More exports will be the result.

Last line...

is the most important aspect in currency exchange - the price value. Cheap currency makes your exports cheaper. The price mechanism is suppose to adjust after a period of time. Government manipulation trumps this market mechanism. The price mechanism says that if you are exporting so much and your economy is growing so much, therefore the value of your currency should rise. Then, your competition will have a more equal playing field. Not so! All one has to do is look at Japan in the late 70s and 80s. No real change in value. Look at China today. They are the king of exports, but they manipulate their currency to maintain market share. Theory is not reality which is another reason to End the Fed! Since the Fed began, the US dollar has lost 95% of its value to which is why the poor in America are suffering. Sorry, I got off on a tangent.  

Deal or No Deal!

That is the question. People, do not be fooled by politics. The currencies are trending in a direction that smart money sees as the outcome. The Brexit / EU trade deal says that Europe will punish the UK. The pound looks like it is heading back to 131. Is this manipulation? Not sure, but rice is the reality. This will be good for the British citizens in the short term as imports will be cheaper with their stronger currency. However, this means the UK economy will be limited. It will eventually fail as the nation will lose export share. The EU hopes to change the thinking of Brexit back to the EU. This is so typical of European agreements. You settle one deal which is preparation for the next one.

The China / US trade talks are basically doing the same poor agreement as is being done in Europe. By holding off tariffs, both nations buy time for their economy. This helps Trump more than China. All Donald has to do is get past next November. Then, he can bring up intellectual theft by China as an important aspect to a longer term agreement. This issue will be put aside as China helps US big farmers with a purchase. They will act like they always act: they lie, cheat and steal. We never should have done business with them. If corporations want a big market, go to India!

The US dollar will be directly effected by whatever happens with the trade talks. If there is no deal, the Fed will continue to cut. If there is a deal, even temporary, the Fed will pause. This action or inaction could cause all other currencies to devalue their denominations to maintain market share. At the moment the dollar is near its high. This will be good for Christmas shoppers, but like the UK, the trend of our economy will continue to decline. At one time the pound was worth $5- US dollars. See what I mean?