Treasury Secretary Geithner found himself on a hot seat before the Senate Finance Committee. He had to explained his docile behavior towards China’s policy of having Yuan pegged to the Dollar. For once he had to skip his “I’m confident” tune and actually said something critical of Beijing practices. It took some serious prodding and rather disparaging remarks from some senators, like “What are you going to do to not let yourself get slow-danced off the floor?” Secretary Geithner finally admitted  that the Yuan exchange rate policy is an impediment to not just US, but a global recovery. It only took him, what, over a year to spit it out.

There are people if Washington willing to introduce bills punishing China for lack of flexibility in this matter. Sentiment is such, that if Beijing is defined as a “currency manipulator”, sanctions will follow. Geithner still has not released the Treasury’s “Currency report” and refused to say when he will do that. In turn he was told that the Senate is ready to vote on a measure which would make China revalue the Yuan, maybe as soon as within next two weeks. It is not a trivial issue with possible unpleasant consequences. Some kind of trade war or punitive tariffs on Chinese goods. In other words protectionism, which is never a good thing for parties involved.

On the more immediate matters, not that much happened in currencies today, largely as expected. Be it the World Cup, end of the week or whatever, trading was lackluster, with most pairs moving in relatively narrow ranges. Chances are that trends from this week have run their course and markets are waiting for a catalyst to spur new moves. As mentioned yesterday, I just took a few really short term trades in EUR-JPY.

Couple of good trades and one about break even. Of course, due to very short term nature of the chart, objectives were small, even very small. However, the two trades that met objectives did so very fast, so, all said, results are OK, even if I took them more to stay busy, rather than “serious trading” as I see it. Wish everybody great weekend and enjoy the World Cup!

Mike K.