FOREX TRADERS

[CPTMatt]

Here is an interesting look at things though.

The LT outlook seems that the dollar will depreciate in a very significant way because of trade deficits and BOP deficits.

China and Japan have huge foreign asset reserves in dollars because of the US trade deficit to these two countries. They know that as the deficit increases the dollar should continue to depreciate but these two counties continue buying the USD.

Why? They are supporting the USD from crashing. They have hundreds of billions of US dollars. Any significant attempt by these two countries to sell their dollar reserves for another currency would very quickly make their dollars worth significantly less.

In other words China and Japan cannot attempt to switch out their huge USD FA surplus because the their investment in the USD would lose a huge amount of value before they could get rid of it all or even a portion of it.