The Chinese Government has started hinting that they may begin to liquidate their vast amounts of U.S. treasuries. Such action could be detrimental to the US dollar and in turn it would potentially cause a spike in bond yields and take the legs out from under already fragile housing market. The Chinese are one of the largest holder of US debt; they hold over $900bn in a mixture of US bonds. They will be forced to sell their dollar holdings once the yuan begins to appreciate; this may be a part of their exit strategy. However, this is only speculation on my part and traders should keep a close eye on global dealings in the US dollar. Traders should always keep an eye on the big picture and make decisions based on their own trading plans and financial situations.
×
Comments are closed.