Key U.S. senator will confront China over its currency manipulation; Battered greenback is struggling to find its footing
ByOct. 4, 2010 | Written by Jeffrey Winograd
Feisty Montana will go toe-to-toe with Chinese – Sen. Max Baucus (D-Mont.), chairman of the Senate Finance Committee, will tackle the issue of China’s currency practices when he visits Beijing next week. “China’s currency undervaluation hurts American ranchers and farmers, American exports and American jobs,” Baucus said. The Chinese government must take meaningful action to address its currency practices and the U.S. must be vigilant in pushing China on this issue, said Baucus. The senator sees his trip as providing the opportunity to discuss China’s currency manipulation and other key economic and trade issues with top Chinese officials. Experienced forex traders are dubious the senator’s visit will produce positive results for the U.S. The Senate Finance Committee has jurisdiction over foreign trade. Meanwhile, during a recent interview aired on CNN, Chinese Premier Wen Jiabao, was hurled back at criticism coming from Capitol Hill. Some Americans, particularly some members of Congress, do not really understand China, he said. They are politicizing the problems in bilateral relations, Wen added.
Greenback may act like a punch drunk pugilist – Will the U.S. dollar continue to face a clobbering at the hands of the euro and Japanese yen? That is the dilemma facing forex traders as the trading week gets into full stride. With the euro topping $ 1.37 barrier and the USD/JPY pair hovering around the 83.35 level, all eyes will be on U.S. economic reports coming out during the next few days. Today there will be new data on U.S. factory orders and pending home sales. ADP employment figures for September will be announced on Wednesday. Weekly jobless claims will be revealed the following day and, on Friday, the unemployment rate for September will hit the headlines. Federal Reserve Chairman Ben Bernanke will be making public remarks later today. Forex traders must remain alert to the possibility of another round of quantitative easing – a monetary policy also known as QE 2 – from the Fed. Meanwhile, over in Japan, another intervention may be in the works and forex traders should not be asleep at the wheel.
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