The Dollar

It is all about the Dollar baby. Would not touch any commodities here. Still short GLD with DZZ. China raising reserve requirements is huge. This takes money out of circulation very similar to us running out of oil. For example, if we were to run out of oil this would increase the price of oil. Here we have a very complicated issue. The Yuan is pegged to the US dollar. So china raising reserve requirements takes Yuans out of circulation (Running out of Yuans increase the Yuans Value). Inherently this raises the value of the dollar. So by them having a pegged currency it hurts the United States.

Higher dollar hurts US exports because it costs more for foreign countries to buy our goods.

This news is going to hurt US China relations.