Citi On The Euro's Surprising Resilience And Why "At These Prices We Are Not Buyers"

Tyler Durden's picture

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Yancey Ward's picture

Maybe the strength is a reflection of the belief that, if countries like Greece are shown the door, the resulting monetary union gets stronger, not weaker?

Sophist Economicus's picture

Who cares about these 'currencies' -- trade dollars and euros for gold and silver.  If i can get more gold with euros -- neato!

LawsofPhysics's picture

Englander has a short position.  Yeah, sell so he can make more money.  Enough with the shilling already.

doomandbloom's picture

off topic but an interesting conspiracy theory. 

Revolutions in Middle East To Kill Islamic Banks In Emerging North African Markets.


SilverRhino's picture

I don't like islamics religion much but yeah I'd bank with these guys.   Can't be any worse than the current shysters.   Throw in a gold/silver backed dinar and I'm all in.


vas deferens's picture

The euro takes more then one country to decide to print more euros.  Having the money chimp at the head of the US FED, only needing to press a button, the dollar is sure to fail first.

Flore's picture

Hey Tyler .. you should take a closer look at the ECB reserves... 66 % gold reserves.. marked to market every quarter... That's why the Euro will be the clear winner worldwide... You heard it here first...

Non Passaran's picture

Yeah, right.

They could probably spend it all just to return a fraction of their debt.

Disc.: long physical PMs and PM miners.

Ferg .'s picture

Interest rate expectations have probably played a role . They've taken a notable upward turn lately . That and Asian CB diversification .

EUR/USD continues to be an almighty pain in the ass to trade .

Bleeping Fed's picture

I'm in agreement on the Asian CB diversification.  Although I think the diversification is more like China trading dollars for Euros to prop up their biggest export market.

Ferg .'s picture

Good point , and the Chineses did state very publicly that they'd be willing to step in and buy periphery bonds .

joemayo's picture

USD value is supported by its ability to reliably purchase oil.  If it cannot do that, then EUR value should increase relative to USD. 

If this ability remains in doubt for long, a no-fly zone will be declared over Libya (and then others) for humanitarian reasons, so that the humanitarian marines can then more easily make their way From the Halls of Montezuma To the Shores of Tripoli.

Dr. Richard Head's picture

Citi was a buyer of a $0.38 on the dollar settlement of credit card debt, so thay works for me.  Taking the difference in debt owed and settled and tossing some PMs me way.  Fuck Citi and the horse they rode in on.  I'll make me own bailout.

Oso's picture

they re just annoyed GS dg'd them today. 

Quinvarius's picture

Because the Euro is a stronger currency than the Dollar no matter how many interventions the US does to prop its toilet paper up.  We have probably given away 20 trillion Dollars in loans and bailouts since 2008.

I still don't get the whole weak Euro thing.  It seemed obvious to me that the US was pounding on the Euro to make the Dollar look better until the Chinese stepped in and took the other side. The supply of Dollars is massive.  It has to continue losing purchasing power.

THE DORK OF CORK's picture

The euro weakness is somehow perceived as a strength - as this is mainly interpreted by bankers this is no surprise.

Most of the money is created by commercial banks - the ECB has bought only something less then 10% of their balance sheet on Gov debt 

The bankers have projected a false metric on the public - the low CPI inflation rate of a unit of euro currency -but the physical economy has been wasting for some time in Europe as the shadow bank sector grew over the sovergin by extracting a capital destructive yield over the remaining bits of the physical economy.

Wage earners are experiencing inverse inflation as their wages are falling relative to goods and services -  this is the stated objective of the ECB.

Their goal seems a Volcker policey of wasting the exterior to sustain the yield on overvalued debt currency with devastating results on Industry.

They may succeed to sustain the euro but at the cost of real wealth in the form of physical capital destruction


ISEEIT's picture

Short euro to 135.7.

It's just a bouncy bounce game. Depends on the time frame (perspective). Both fiats are going to get flushed but you can make a buck betting on the trip down (who falls faster) VS (who gets wings for a bit).

I think the 5min to 10sec chart are the most fun with a subconscious awareness of 30 day plus sentiment. Longer windows are (IMHO) garbage. Just look for a contest in the short areas and make small bets.

JonTurk's picture

EUR should have been crashed in this week's risk off but it stood like a rock.

market is giving a major signal about US currency: two gigantic negatives taking its toll on USD;

1- Middle East crisis and uncertainty about the region is a big (-) for US, considering its decades long dominance over the area

2 - QE to n virus started to eat into the basis of reserve currency status; re: UST10 topping out, Asian sovereigns unwinding US debt


Jack Sheet's picture

..."Globally, Central Banks continue to sell the USD against the SDR currencies of Europe, the UK and Japan, with those of Australia and Canada gaining additional flows.  This will not change.  Nor will the considerable yield differential between US and European 2-year swap spreads, last quoted at 109 basis points in Europe's favor.  While Europe may be taking a step backwards, news of US Fiscal duress are beginning to come to the fore..."



rayban's picture

The recent euro strenght is VERY suspicious. Weber is gone and is openly critical of current EU policies, Merkel loses Hamburg, rioters attack policemen in Athens once again, Irish elections over the weekend could mean a package re-negotiation and we have only 15 days in advance of the EU summit at the end of March to find a unanimous agreement on EFSF extensions before Finland dissolves its Parliament... I guess Trichet is going to be really hawkish next Thursday! At least that's what some big guys must be thinking, since the net euro long positions have increased to 45600 contracts as of February 22. Just in case he'll disappoint them all, I'm buying now some April 1.34 puts at approx. 0.0090 (11.5% vol).

jonytk's picture

Eur weakness is considered an strengh because as soon as Euro falls under 1,20 Germany exports skyrocket, and Eur above 1,4 hurts exports but help cope w/ gas prices.

So here you got the explanation, as simple as that. ECB helped by the loose organized, but not dumb, EU politicians just have to open their mouths to move the Eur up/down.

Itsalie's picture

The main reason why "talking the euro up and down" works is because the forex market has ballooned into another HFT hedgies paradise: all their programs are cued to tghe latest artificial intelligence-driven key-word speech-to-text translation algos. Whenever the algo sees the words "Trichet/Weber" together with "inflation", its buy Euro. Ten years ago, there wern't such rubbish AI-driven algos and alot less wet-behind-the-ears 24 year old PhD hedgies", and whenever the ECB tried talking the euro up when it was below parity with the USD, they get the euro sinking faster the next day.

Plus china/japan have a pact to basically prop up the currency of their biggest trading partner (yes the euro zone, no not amerika aka zimbawe), seeing how screwed (aka over-leveragd) the american consumer is and how the chimps in the Fed / Congress are hoping to "create jobs" while enriching their masters (aka the banksters) and their key campaign sponsors (aka big businesses) by printing more toilet papers (at least the hypocrcats in brussels aren't openly saying they are conducting QE - so the HFT algos would never be cued to see the words "Trichet/Weber" and "QE" together, so never have a chance to "sell euro")). Everything else, including the freaking swap markets are cued to the same algos. So the inevitable outcome is whenever euro touches a key round number like 1.33 or 1.35, you have JBTFD! (aka just buy the !@#$% dip).

scratch_and_sniff's picture

Probably very convincing, more moving parts than a flux capacitor, its a shame im such a ludite. Seriously, i have to snigger at the growing complexity of these arguments, what a silly broth. Is this guy looking for pips from these arguments or a nobel prize for juggling trifles? I wonder how seriously he takes it all? Overhangs, perceptions, sentiments, credibility’s, orientations, diversifications,relativities, overestimations, correlations, indications, pressures, participations, incentives, magnitudes, intentions, aversions, proxies, rhetoric, intensities, appetites, feedback loops…what a complete fucking maniac. Do me a favour!

bluebare's picture

Realpolitik at play here, too.  Who's buying?  Chinese have as much as said they're supporting Euro (and left unsaid "at least until the USD goes under").