Our Treasury Secretary is in China, as we know, for high level talks. His meetings with Chinese officials must be interesting indeed. Is he demanding appreciation of Yuan or assuring his hosts about safety of their investments, or assets, in USA? Personally I find this situation a little strange and wouldn’t want be in his shoes. Regardless, Timothy Geithner issued an upbeat statement today that “The global economy is showing early signs of stabilization due to action by the United States and China”. Now, that’s one politically correct sentence. Couple of days ago I wrote a piece about Treasuries and the Dollar. . I pointed out sharp increase in rates in recent weeks. Very conveniently our Treasury Secretary commented on just this development. Mr. Geithner insisted in his interviews that recent increases in the interest rates investors were demanding to hold U.S. Treasury securities were not a sign of unease but a reflection of improving economic conditions.
Well, I’m not an expert on interest rates, but shouldn’t we see rates moving up across the spectrum, including short term, adjusted by FED? And in a more steady, orderly fashion? I think his explanation to that was a little off. Before he left for the visit, there were some voices state side claiming that China was to blame for this whole mess, because they save too much. If these people only started to spend, this crisis would over with soon, right? Do you think anybody asked him to clarify this issue? What was the answer? “Yes, there are voices like that in Washington, but it is because we respect you very much”. Or something like that, in line with the remark about rates. But, as I said before, his job is not enviable at the moment.
Last post covered possible buy in AUD-CAD. Here is what happened.

I wanted to buy on a breakout above 0.8820, expecting a price retracement before that level was reached. This didn’t happen, price went through the buy level. Some time later, pull back took place and it was promising. Price dropped to 100 SMA level, and I bought it there at 0.8821. Objective is still 100 pips.
Pound has been getting stronger, but just how strong it really is? It is still lagging to some currencies, Aussie and Kiwi, though it could be changing. I want to test it.

This is hourly chart of GBP-NZD and it looks to be in early stages of building a bottom. As far as I’m concerned, in order to reverse price has to go above latest high first. That’s where I placed a buy order, at 2.5450, looking 2.5750, or so. This is not a very high probability set up, but I don’t see all that much anywhere else and really am curious about strength of GBP. Meanwhile, waiting for good news from Japan. Any good news, they seem to be pushing Yen down.

Mike K.