I just don't see how you can say this is a big move by the yuan. That chart is very misleading due to the scale. The exchange rate has moved only about 2% over the last year. The Euro US Dollar exchange rate has had a swing of about 10% in that same period.
If China ever lets their currency float you will see a big move! (which, IMO, is when we will really see wage inflation showing up in the price of goods we buy).

I should have added that gold has made a 30%+ move in the same time period.

Last week the talking head theme was the market is undervalued; this week the theme seems to be Iran could close the Straits of Hormuz. That is absolutely irresponsible in my opinion.

The closure of the Straits of Hormuz (probably the world's #1 hotpoint) would rate on the same level as Iraq's invasion of Kuwait in 1990-1. Will we EVER see a move toward responsible journalism in the US? or will things continue to move toward fantasy speculation? Amazing!!

cb:

Lets say a couple of tankers were sunk at the choke point of the Straits, the Fat Lady could very well begin to sing ... for awhile at least.

C.Note -
Agree about the negative result attached to your scenario but it is wildly speculative. Any risk assessment of the talking head or your scenario would likely be 1% probability or less. Hence, why even bring it up?

I am not bullish on this market but sheesh, how long will people be driven by unsubstanciated speculation and titilation?

tie looking like a reversal to the upside

ccj...maybe breaking out of a triangle

China is dealing with an overheated (double digits growth)economy that they want to slow down (if I recall correctly)to a goal of something like 9.2% growth or thereabouts.

Accordingly, last week the People's Bank of China raised interest rates 27 BPS. Everbank is also mentioning "rumors" that the People's Bank will allow greater flexibility in the yuan exchange rate. It will be interesting to see how much flexibility as this has occurred in the past not at a rate traders expect, but at a shrewd slow pace determined by what they believe is in the best interests of China. Perhaps they will expand their daily percentage limit. Nevertheless, the trend is a strengthening yuan.

Renminbi/yuan reached an all time high in overnight trading.

Maintaining long positions on weakening dollar and miners.

Bill what do you think will happen with the CRB?
I've been watching this chart and it seems to be
turning down. If China and the US and the World
economy slows down, perhaps demand for
commodities will slow down.

http://stockcharts.com/gallery/?%24crb

Bill is there any chance of deflation?
Could the RE market cause deflation?

In addition to technical charts and indicators and other assorted mumbo jumbo, another gage of a company's fundamental strength is the support it provides to its customer base...

"GM to produce new Camaro in Canada

OSHAWA, Ontario General Motors says the new Chevy Camaro will roll off the assembly line at a plant just east of Toronto.
G-M officials and union leaders say the move comes after the Canadian Auto Workers union agreed to 25-hundred early retirements to win the rights to make the new car.

The plant was scheduled to be closed in 2008 but now will stay open, saving about 27-hundred jobs.

The automaker plans to revive the muscle car in 2008 with models hitting showroom floors in 2009.

GM stopped making the Camaro in 2002.

The automaker hopes a new Camaro will attract younger buyers and appeal to its traditional customers.

Copyright 2006 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed."

Here is a rather frightening interview with a Chinese ambassador regarding Taiwan. Amazing how little publicity something like this receives. This a not dollar bullish and I simply cannot understand why the Fed is manipulating gold lower so our enemies can buy it cheaper.
http://www.bbc.co.uk/worldservice/programmes/the_interview.shtml

I think Bill's sharing of intuition about correlations between market is VERY HELPFUL. All judgments about market behaviour are tentative and subject to quick change based on new information. That's what traders do. But developing a sophisticated sense of market dynamics is HELPED by this.

Secondly, I think discussion of extreme (unlikely?) market outcomes is RESPONSIBLE. And, Iran has in yesterday's war games shown its missles, and previously its long-range underwater torpedos. I can well imagine them firing at something during the upcoming diplomatic tussle.

Even if they don't HIT a ship, oil price will rocket up, damaging the west, and increasing their oil revenues. And, don't forget, Iran has created oil disruptions before!

Final thought on extreme market events. Mandelbrot has an intriguing book, Misbehaving Markets, wherein he shows that extreme market movements are MUCH more frequent than in the "normal" distribution upon which most Wall St. risk models, and Modern Portfolio Theory (MPT) are based.

Traders need to keep this in mind. Spectulations even by talking heads helps us to do this ...