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Some currency gamesmanship going on here. China says they are diversifying out of dollars and into Euros. Does anyone really believe they would come out and say this publicly? Like saying I've got 72 offsuit and I'm putting you all in. Just not believable.

If you held dollars, you wouldn't attack the currency pushing it to all time lows. And you wouldn't praise the Euro pushing it to all time highs if you really wanted to buy it.

You would however make this statement if you wanted to dump your Euros at the top and buy dollars at the bottom.

I'm giving the long dollar trade another try at 1.47. With gold hitting 850 and oil near 100, there is inflation mounting. I still think rates are going to have to go up soon, which should benefit the dollar. At the least, rates shouldn't go down, even given the credit problems.

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China isn't the only player here, other countries are holding $ that they want to get rid off. The name of the game is don't be the last one holding dollars right now. China's move could easily be because they think Japan/Saudi Arabia/Russia will be moving large amounts of US currency soon and want to forstall it by hammering teh currency now, its not like China was going to be able to unload $500,000,000,000 without people noticing anyway.

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Interesting. So you are saying that China is holding dollars and they fear the dollar is going to fall. They know others will be selling soon. So logically they just kill the game before anyone else has a chance to get out (and in the process cost themselves nearly $25,000,000,000)???

Seems like a self defeating move and cutting off their nose to spite their face...