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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: russwinter who wrote (37980)	8/6/2005 12:29:17 PM
From: futures speculator	Read Replies (1) \| Respond to of 110194

With regard to foreigners (actually the FCBs) being the equivalent of the "bond vigilantes" of the 1980s, I think that IF they were going to do it, they should have done it LONG ago. Now they're stuck with huge amounts of paper USD, that can't really use. If China/Japan try to convert part of their forex reserves into Euros (the only other option with markets deep enough to absorb this kind of capital, a fact that many people seem to forget), either the EU assets are going to skyrocket or the EUR/USD is likely to soar. The question in forex diversification is who will blink first. Last few days the 450pip rally in EUR/USD was due to EUR buying by Russia and Middle East (petro-euros). Some work I've seen suggests that China has been diversifying into Euros for some time now. So, Japan is left holding the bag, with all of its $860bn reserves in USD. I imagined BoJ would at least have unwound its USD/JPY bet (the $320bn of counterfeit money created in 1Q2004) and would have tried to support the Yen, which has the worst performance against all major currencies. PS: I was unable to post here for about 2 weeks (the BBS software wouldn't let me), which is why I left some questions to my previous articles un-answered...