My Views on Daily FX Update: Watch China, and Watch the Dollar – From here on, They go Hand in Hand

Tuesday saw a major help to British bank Barclay’s, during the heart of the credit crunch bailout of their investment. Abu Dhabi, which purchased 11% of Barclay’s shares late last year, just unloaded it all for 2.5 Billion Dollars, a move that sent shivers down the spines of Sterling investors throughout the world who thought that the banking issues were resolved already.

To be fair, no one really knows why they sold the shares, but the fact that they did is huge, because it’s not clear whether or not the bank is stable enough yet – and as a result the Sterling fell, a move that made Forex online traders scratch their heads.

It seems that hot news just keeps coming from the General Motor’s front – US Secretary of State, Timothy Geithner, was in China doing his best to convince the Chinese administration that the US is committed to stabilizing the dollar. While this was going on, China was working behind the scenes on the purchase of General Motor’s luxury SUV brand, the Hummer – a move that clearly made the Obama administration take pause and wonder what exactly it is they are doing.

The company that is in talks with the Bankrupt GM for Hummer is out of North-West China, and is labeled as a plastics company that has a desire to become a carmaker. If you ask me, this is a way for the Chinese to unload their dollars and buy a tangible asset – the problem is with Obama’s new café standards (carbon emission requirements) being so high for even the most conservative friendly vehicles, I am not so sure that cars as big as the Hummer will qualify. Which makes you think, as I am not a rocket scientist and I know this could be a problem - just what is China up to now?

Imagine the scene, the Chinese “help” out GM by buying a luxury brand and then employ Americans in the plants to make cars that can’t even be sold in the US – is that a public relations nightmare or what? Anyway, as Forex online traders (and offline) know, the Chinese will soon be the dominant economic power – just give it 10 years or so –these purchases are just strategic ways to literally “own” a piece of America. It’ll effect the stock market worldwide, Forex online trading etc.

History has shown us that this is the way it’s been done. It is how the US became what they are today, less than 100 years ago. Watch China, and watch the Dollar – from here on, they go hand in hand. As for the British banks, I told you weeks ago it was not over – thanks Abu Dhabi for supporting my case.