The game of undermining the US Dollar is under way...

I note, through friends of mine, how the Shanghai Group backed Russian proposal on using national currencies in mutual settlements and introducing a commen currency. Mededev own wording: "The current set of reserve currencies and the main currency - the US Dollar - have failed to function as they should" ... http://en.rian.ru/business/20090616/155268544.html

The meeting included China - so the China/Russia link is showing up more and more, and it again goes to my point on how Asian and EMG countries overall are focused on getting their proper share of political and economic power - they want to keep the flow "local" - which will have material impact on unemployment levels in Europe and the US. (Increasing "natural unemployment").....

The more short-term critical aspect becomes one of how this "Think Local - Buy Local" will derail all the global intiatives in G-7, G-10, G-20 as the economic impact will be one of less recycling of current account surpluses, meaning less financing for the indebted US and Europeans......

The growth rates in Asia, EMG will outperform G-7 by more than the norm going forward, although I suspect the REAL DATA will be that Asia + EMG will barely grow while the USA+ EUROPE will be in recesison for far longer if this game Think Local- Buy Local continues.

The other topic is again one of the FED trying to "talk to/leak to" the market that they are not even close to raising rates....

FED weighs FOMC statement: http://www.bloomberg.com/apps/news?pid=20670001&sid=arWqPRMOr14A

This combined environment of Fed "not" going to hike - surprise, surprise, plus continued talk of diversification away from US dollar- got me long: EURUSD and S&P again .... (took profit yesterday on short S&P and short EURUSD).....

Puma Macro MTD: + 27 bps (3 trading days).

Safe trading

Steen Jakobsen