The All Flighty Dollar
Where there's smoke, there's fire. Unless it's Fed Chairman Jerome Powell chain smoking, hoping the clouds cover up increasing inflation. But the first phase is here - spiking commodity prices.
Another sign is the Chinese yuan strengthening to levels not seen since '16, and set to be pushing 6.2-to-the-dollar, according to Citic Securities. Not a bold prediction: the Biden's administration's fiscal policy must perforce remain looser than a pair of Tesla brakes. As to China having to keep closely pegged, enter the digital yuan, not for replacing the dollar, but for a trial separation - see other markets on their own terms.
"Don't forget the spike in foreign investment into China, driving the yuan's appreciation," says Edward Lehman, referring to a total of almost $37 billion in Q1 2021 for tech and service industries alone, more than a 50% increase YoY. "What with a maturing financial industry and loosening regulations on FDI options, we're finding interest in China investment at highs rivaling the early WTO days. Foreign invested enterprises are up almost 50% too, over 10,000 so far this year."