Wednesday, October 20, 2010

Currency War - Round 6

China has increased interest rates seemingly to appease the US Fed who has been ragging on the Chinese for months now. The move has fooled the Forex traders for the past two days.  Unfortunately for the Fed, who would love to see massive inflation in China, China is smart enough to control inflation without losing the trade battle.

Watch out for US labor interests holding down the $ vs. Yen and Euro. Those forces will be over-run.