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Strategies & Market Trends : John Pitera's Market Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: John Pitera who wrote (8335)	10/1/2007 9:23:08 AM
From: Hawkmoon	Read Replies (1) \| Respond to of 33421

John, No problem!! I thought it was an interesting article.. I feel USD/HKD is on launch pad and the HDK is going to appreciate big time, considering it was pegged. I expect to see the USD/HKD rate going down to 6.75 in the next few months which is a very big deal considering that the "floating" peg at 7.75 has been in place for years. So, given the conclusion that business and people in China have been borrowing the cheaper HK dollar and then using it to finance Yuan based business and construction, would not a climb of the HK dollar equate to an unwinding of that carry trade? Could that possibly lead to a financial crisis in mainland China that the politicos in Bejing would desire to avoid? Additionally, having the USD decrease EVEN MORE can only generate more concerns from the Europeans.. But, of course, the Europeans would also like to see the Chinese break the peg to the USD.. So is it possible that there has been some "coordination" between the Fed and ECB to let the USD slide to the point where the HK peg has to be broken and it forces China to permit their currency to trade freely? A weak USD is not going to be beneficial to those nations dependent upon exports to the US for economic growth. Hawk