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Re: China Revaluation Q.
Impact on the majors as I see it:
1 Capital flowing out of the USD due to less Asian (not just China but Japan, Korea, Malaysia etc) central bank buying of the USD and US treasuries.
2 Capital flowing into Asian currencies seeking capital appreciation.
3 Capital flowing into other major currencies as Asian central banks rebalance their reserves away from the USD and into a basket of currencies.
Net effect should be?
USD/JPY to fall
EUR/JPY to fall
AUD/JPY to fall
AUD/USD to rise
AUD/EUR to rise
EUR/USD to rise
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