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imported post -
28-02-07, 10:19 PM
Most of the Major Commodity markets such as Gold, Silver,Coco, etc trade in Dollar so countries ( of Companies in Foreign Countries) have to hold dollar reserves this gives the U.S trading advantage (like britain used to have within it's Empire using Sterling).
In the short to medium term I would sell the dollar buy the Euro as a recession has been in the pipeline now for some time.
In respect to China the main issue as I see it is that as an economy it's manufacturing base is growing steadily and under cutting Western products, this can be seen in the Clothing sector in a big way most of the clothes made in the u.k shops are from China.
So labour costs make china competitive at the same time the Chinese Government have a huge reserve of U.S government bonds that is virtually holding the U.S economy to ransom for it the chinese decided to sell it's Bonds it would mean economic melt down.
It has been argued that the real reason behind the Iraq war was the idea of starting a rival Oil Exchange in Iraq or Iran and use the Euro as the currency medium. This would have an adverse effect on the Dollar when you think of it why don't the developing countries have stronger exchanges and use them as the centres of trading commodities rather than all that business going to the U.S and Europe ( Liffe or NYMEX or even the London Metal Exchange)
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