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China's slowing economy: What's wrong?

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A lack of liquidity in the foreign exchange market eh? What, some traders were having difficulty liquidating their cash and were unable to convert their cash into cash?

Yes. When you need/want to sell something, but you can't find a buyer, that's a lack of liquidity, don'tcha know. This is exactly what happened when the dollar/yen rate went from around 119 to 116 in a matter of minutes.

Whoever did finally sell dollars for yen at 116 will be very familiar with this liquidity concept by now, I'd imagine. (Probably whoever was selling couldn't wait to sell.)

I'm not even going to respond to that one. Wow.

You just did. It's not so complicated, once it is explained to you, is it?

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Sir--amateurs in government are prodding the chinese investment market..theyhave only themselves to blame. I smile because the chinese are blaming USA and Europe for chinese money problems...

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"One day's prices, do not a "safe haven" make"

If the day was Monday, which saw some drastic swings throughout global markets, then yes they do.

I guess you didnt see the other new story in this section, "Aso warns over yen's rapid rise."

Well, I guess finance ministers, analysts, traders and about a million other people who are noting the yen's surge amid global uncertainty are laboring under a fantasy, eh?

"Such a move occurs because of a lack of liquidity, not because a "flurry of buying/selling"."

I'm not even going to respond to that one. Wow.

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I'm so glad that I work in an industry that isn't impacted as much by news like this. When I did exporting it was a stress festival when I'd wake up and start reading the news.

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Such a move occurs because of a lack of liquidity, not because a "flurry of buying/selling".

A lack of liquidity in the foreign exchange market eh? What, some traders were having difficulty liquidating their cash and were unable to convert their cash into cash?

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The Yen and the Swiss Franc are considered safe havens when economic shocks occur, due to market volatility requiring a more risk averse position. Since the 90's there has been a identifiable pattern in the case of the Yen, because the expectation that insurance companies will invest their sizable foreign assets in a off risk environment.

In case like the 2008 crash , large movements occur, the Yen appreciated by some 6% in nominal effective terms without any movements of Japans capital outflows. This leads to a risk strategy devoid of any large scale exchange rate movements. The Yen and the Swiss franc are the only two currencies that appreciate against the dollar during these episodes.

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I thought we are talking today's news.

One day's prices, do not a "safe haven" make, and as I pointed out your logic would have the Euro as a safe haven. Reality is the dollar had a bad day. After strengthening for ages.

75 was an all time high, and temporary and sustainable. If you'Re using that level as a base, then you clearly don't know what you're talking about.

So if you don't accept that being historically strong is a feature of a "safe haven", then what is a feature? Every freely traded currency goes up and down, depending on the day. So the yen had a good day yesterday - you want to make a big deal of it. But the yen has been a piece of rubbish since Abenomics started.

So I humbly suggest that it is you who doesn't know what you're talking about.

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"It was 75 a few years back"

I thought we are talking today's news. But if you want to drastically move the goalposts for argument sake, then so be it.

75 was an all time high, and temporary and sustainable. If you'Re using that level as a base, then you clearly don't know what you're talking about.

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Yes it's 119 today (exactly what I said). It was as "strong" as 116 yesterday, which is why I described it as having shot straight back down, after you described it as having shot up.

121 yesterday, 124 last week... Forest for the trees? It was 75 a few years back.

The dollar has come back a bit today but that was after some worries eased,

LOL, all of a sudden "some worries eased" did they? Please provide us with the details. Meanwhile, Chinese stocks are down another 6% today.

The fact is, the yen was Monday's leading safe haven, whether you like it or not.

The yen was up on Monday (and up and down today), but that wasn't because it is a "safe haven". Look at what happened with the Euro versus the dollar - up as well. Is the euro a safe haven all of a sudden?

Claiming the yen is a "safe haven" every time the yen displays the odd bout of strength (or the dollar, weakness) is like a broken clock being correct twice a day.

The next time the yen hits all time highs I'll concede that it's a "safe haven".

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"Note also that the yen has shot back down again."

Huh? It's 119 today, yesterday was 121, and last week was 124. (Note: when the number goes down, it means the yen is stronger. LOL).

The dollar has come back a bit today but that was after some worries eased, again proof of the yen's haven status. The fact is, the yen was Monday's leading safe haven, whether you like it or not.

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Not a wink of sleep, mercifully I exited positions a couple of months back, more out of luck than judgement, I still took a hit, a few digits singed, you win some you loss some. Euro-zone has taken a pounding, and have yet to fully absorb the full impact of the slump.

The evaporation of confidence feeds the panic. German industrial economic growth has been dependant on China economy, and consumer spending. My numbers show the Yuan is overvalued by still some 7% minimum, factory gate data shows a very gloomy outlook. The dollar/yen 5 days is hovering around 119 -3.65% , the Euro 5 days +4.70%.

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Note that the yen shot up on a flurry of buying, due to Japan's safe haven status.

Note also that the yen has shot back down again.

The dollar/yen rate is today at 119 versus rates some 30% lower just a matter of years ago. Losing 30% in value is not a feature of a safe haven.

Yesterday's late-summer, short term gyration saw the usd/jpy rate at one stage plunge from 119 to 116 in a matter of mere minutes. Such a move occurs because of a lack of liquidity, not because a "flurry of buying/selling".

The dollar had a very bad day, as people have recently been reconsidering their ideas about US monetary policy. But that's it.

The yen may have already posted its lows for 2015 against the dollar, but longer term it is still a far dirtier "dirty shirt" than the US dollar. For those who missed evacuating their savings from the yen, blips like what occurred yesterday offer a chance to offload some to those in a panic to buy it. Mostly short-term speculators I imagine.

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This article asks "What's wrong?" but looks entirely at the slide in stock prices or other downward trends. It entirely fails to appreciate much of the "wrong".....is what led to astronomical market highs in the first place. Like large quantities of poorly-educated amateur investors (farmers, old women, etc.) plowing their entire wealth into the market and blowing the mother of all equity bubbles.

http://www.zerohedge.com/news/2015-04-20/chinas-day-trading-hordes-unmasked

http://www.zerohedge.com/news/2015-07-28/how-chinese-farmer-lost-more-everything-trading-stocks

Not to mention the huge government-led (mostly local government) capital misallocations in things like heavy industry and construction. Everyone knew those had to be corrected but seems shocked (SHOCKED I TELL YA!) when it actually happens.

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London ftse t100 is flowing red down 4.6 and losses of close to £60bn, not since 2013 has the market seen falls so acute. It's headless chicken panic. 15 minute from Dow Jones opening how far will the drop be 4%, Shanghai Comp is a 9% drop, not experienced since 2007.

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Just a correction. China announced a year ago it wouldnt be going for quantitative growth, but quality instead.

Note that the yen shot up on a flurry of buying, due to Japan's safe haven status.

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China has turned into a noteworthy impact on the world economy. The significance of China on the world economy has expanded enormously in the course of recent decades. So changes in its economy can have a noteworthy effect on the worldwide monetary and budgetary framework. Manufacturing industry is solid fare drove of china. Be that as it may, today's financial information discharges from china have some awful news identified with economy development, and there is still minimal indication of development.

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The Nikkei biggest one-day slump in more than 2 years, 4.6 per cent down, China is in a grip of over capacity. The global aftermath is stark €227bn has been wiped off European equity markets this morning. The Rouble falling 70.95 to US dollar. FTSE100 - 2.4pc, Dax: -3.0pc, Ibex: -2.9 pc, CAC: -3.2pc, Mib: -2.9pc, Shanghai comp on a 8 year low and still on a downward slope. £40bn wipe off London FTSE in 2 hours. All the talk of a currency war, countries will protect their internal markets with whatever it takes in the short term, swingeing trade barriers, tariffs and restrictions take your pick.

Dealers are looking for a safe haven Yen to Dollar 120 11 week high, Euro to Dollar 1.15, 6 month high....

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