By James McKee
China’s outspoken distaste with how the US government has been handling its finances has not bee a secret to anyone, however they are now claiming that the way out of this quagmire is to buy other currencies. China’s thought is that other currencies (probably NOT the Euro) will be easier to control, since the United States government is not listening to anyone at the moment. China’s lack of political support for US incursions in Libya definitely does not help the situation either, and while political occurrences alone would not prompt China to move away from the dollar they certainly do not help.
If China does go forward with their plan to exchange the US dollar for other currencies look for the US dollar to drop through the floor on Forex charts. It is not going to be a good day for the US economy or most economies on the planet for that matter since the US dollar is the reserve currency of most nations. Every country’s government however is waking up to the fact that the United States has no real interest in preserving their financial solvency. While all countries will not “dump” their USD holdings all at once even an incremental sell off would be disastrous.
The only solutions to this problem lay in the United States doing everything it can to preserve ties with China and make a real effort to gain the trust of this economic giant. If the United States fails to do these things look for the USD to begin a massive slide sometime very soon after China begins its selloff. The USD will fall against most other majors on Forex charts if China does decide to sell off and many other economies and their currencies will be adversely affected as well, these are dark times for the USD.
About the Author
Author is a Forex trader and financial analyst residing in Denver, Colorado. To stay up to date on all the latest developments in the financial world and beyond be sure to check out the online forex trading regularly.
