Dollar Effects

Lets talk about oil, the effect of a strong dollar on China, the peg… that commodities flash crash some joker (moi) was talking about awhile back and natural gas. 

From Across the Curve... "expects USD/CNY to get to 6.80 next year… it will be a USD/CNY rate above 6.45 or a USD/CNH rate above 6.50 that shakes up global markets, sending investors scurrying back into government bonds."

We Natter… At the moment the USD/CNY is 6.41 – 6.43… The BS Euro spike on Draghi's inaction that kicked DXY down to 97 is a breather before King Dollar resumes its "exploding plastic inevitable" to the upside. 

Should DXY settle above 100 and keep going and the USD/CNY gets over 6.45, you will start to hear the screams on the street. IMHO, Euro/USD parity and 140 yen, not far off.  

As for the peg, China can't cut it without serious consequences, as in, all that "dollar" debt that their NFC's and banks are carrying, as well as the forward currency swaps the PBOC has been kicking the can with.

As for the commods flash crash, its happening.  Oil hit $36 and $30 is in full view and not out of the question, as producers continue to scream and some will be defaulting.  As for Natural Gas at 2.061. some numbo jumbo..

In 2013 with all costs considered and adding back for depreciation, Cabot had a 1.40 per 1000scf cost. (which would be one tick or .001 on your /NG contract.) Since then costs down, supply up with all the fracking going on and demand, flat at best. Take that for what its worth in trying to figure out "how low can it go".