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FLASH ALERT:

We MUST send out this 'flash alert' ... as the USD rallies, and commodities decline, counter to our 'stance' ... we note that the moves are coming on the back of headlines trumpeting 'Dollar supportive' comments from the Chinese Central Bank, who said that they would like to see a 'stable' dollar. BUT, under the guise of "watch what I do, not what I say", we note that the People's Bank of China has ACTED, somewhat decisively, in a way that has avoided pop-media hoopla (thanks to their dollar supportive 'mis-direction') ... in saying that because the dollar has NOT been 'stable' ... that the central bank will now allow banks to undertake settlement of cross-border transactions between Chinese exporters, and members of the Association of Southeast Asian Nations, in CHINESE YUAN !!! Further, the government will offer TAX BREAKS to exporters who make use of this new settlement option !!!! And, there is talk that a similar announcement will follow soon, involving trade with Brazil. Unless I am missing something, this is HUGE news, and it is FAR from 'dollar supportive'. With payroll data dues within an hour, and a long US holiday weekend looming, it would not be prudent to act upon this 'read' until after the jobs report has been released. However, with commodities on the run, and with the dollar appreciating, and, with two Chinese trading days until the US 'trades' again, we would not be shocked to see the dollar lower, and commodities higher, early next week. The news from China is significant in our opinion, and marks an acceleration in a global political-attack on the greenback's status as world reserve currency. Indeed, comments from both the Chinese CB and the Malaysian CB this morning seek to shine the spotlight on the next G-8 meeting, as a time to begin a more serious discussion as it relates to 'global reserve currency alternatives'. We remain dollar bearish, and thus, we remain friendly towards the commodity complex. We wait for the US Employment Situation Report, to complete our next full-blown Money Monitor focus on the US macro-market scene, which also includes a top-down overview of the Housing and Mortgage markets, and focus on some eye-opening data for Commercial Bank Lending.

Gregory T. Weldon

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Weldon Financial was founded by Gregory Weldon in 1997, and is recognized within the industry as one of the top macro-research firms in the world. After attending Colgate University within the Class of 1982, Greg began his successful career in the financial markets “in the middle of the mayhem”, in the Comex Gold and Silver Pits. He quickly discovered that a trader’s instincts are his most valuable resource, along with vigilant analysis of the fundamental data and a clear understanding of a market’s technical structure.