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EUR Plunges Against Majors, Drops To Month Low Vs Dollar On ECB Comments, Rumors SNB Unwinding Euro Positions
Things in Europe this morning have a decidedly deja vu May feel. The EUR has plunged against all majors, touching a one month low against the dollar as John Taylor is proven correct for the nth time, having top ticked the EURUSD inflection point literally to the day. Further validating the return of European concerns fo the main stage is the fresh all time record yield on the Bund, with the future rising above 133 for the first time. There are two key reasons cited for today's weakness: the first are extremely dovish comments from ECB's Aexl Weber that the central bank should keep "unlimited lending through year end." This simply means that Bernanke's QE Lite idea is not lost on Europe, whose own little mini gold age has ended, and the continent is once again considering ways and means to kill its currency. Don't be surprised if Germany decided to throw Greece on the sacrificial altar - in that regard, the recent Spiegel article may just have been the warning shot. Additionally, there are rumors that the SNB is unwinding its hundreds of billions of EUR holding. The indirect evidence: a surging CHF, which however could merely be a return to the flught to safety of the old regime, as Europe once again realizes just how bad things truly are beneath the surface.
EUR heatmap:
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Short Euro, Bitchez!
EU-Oh-Oh-Ooohhh!
I wonder what is meant by, "throwing Greece on the sacrificial altar." Does that mean ejecting them from the Eurozone? You'd be doing them a favor, and everyone else. The sooner the charade is over, the better.
My guess is that means jaw-boning and saying they are not going to buy any of their debt.. In simple terms.. Or, if they do, they will demand higher rates for risk and reinforced austerity.
This in turn will put a panic back in the EZ and cause the EUR to fall against majors.. If Germany had a 1:1 on the EUR/USD, they would be in good shape, as they are the exporters of the region.
Hmmm, in other words, same-old same-old, put off the reckoning for another day. Eventually it'll dawn on the young in society that it's the old who are sucking at them like leeches; that's when the battle lines will be drawn. Government has become a leech-ocracy, designed to create a bountiful retired existence at the expense of someone else. Watch out when that someone else wakes.
I would guess that Germany is going to force Greece to pay for their past indiscretions instead of owning up to the fact that the EU is broke. Someone has to pay, and it will not be Germany or France. Greece will eventually wise up and leave the EU.
Most likely it means forcing/allowing Greece to default inside the Euro, instead of continuing with the current deal under which Greece is forbidden to restructure and in exchange gets more debt forced down its throat like a /foie gras/ goose. (This is the Spiegel article referred to. Der Spiegel now reports that France is on board.) Remember, this is how the Euro is actually supposed to work. And indeed it would be a favour for Greece. Less so for the banks in the Eurozone core which are exposed to Greek debt, the parties who are really being helped by the current arrangement. Switching from propping up Greece to bailing out French and German banks directly would surely be a chancy bit of Jenga in financial terms, and politically risky as well. That leads me to think that the Double-Secret Restructuring Mechanism (remember, don't let any bond traders find out!) is primarily intended for Spain, which would be a nightmare to prop up without restructuring. But that doesn't necessarily mean it won't be imposed on a smaller PIreGS first.
Regardless, if and when it does actually happen it will be the first important capitulation on the NO MOAR LEHMANS martingale: so, pretty momentous.
EURCHF was really surging yesterday. Flight to safety especially in light of Euro Gold. EURUSD broke 1.2730 but stuck since ... we'll see. Autumn is here and this should be getting interesting.
http://www.youtube.com/watch?v=f_ptqXqjsZw
The latest bounce of the "dead cat" is over.....
http://img265.imageshack.us/img265/9184/eurodeadcats.gif
Great Heat Map, would love if links worked and could thus scroll back through time, thanks.
Hey, I'll buy some of those Euros you guys are selling down here at 7 even.
I'm pretty sure John "FX" Taylor nailed the top of the euro about 2 weeks ago. Props.
The EURO CRISIS refuses to go away::
http://www.telegraph.co.uk/finance/economics/7954981/Greek-crisis-refuse...
I remember John taylor saying stock markets will start coming down by the end of August
Chart: 6E
Euro futures appear now to be backtesting prior support but remains firmly in a down channel formed earlier in August.
http://www.screencast.com/t/ZThjMjk0YT
The Fed has taught the ECB almost every neat 'monetary trick' available,
except......
http://www.foldmoney.com/
......your turn Axel Webber.Hah...lets see what other illusions you can pull off with those Euros.
The last time the Euro 'plunged' (to below 1.20) 'everybody' was shorting it. What happened? Euro to 1.32.
Agreed Weber's comments have helped it to fall, but would anyone in their right mind want to be long the dollar (I realise the Euro has been going down against other currencies such as CHF and what was described by a Reuters story earlier as the safe haven (?!) of the Yen)? The dollar may be the de facto reserve currency but the US is doing the same as the Eurozone - it's the race to the bottom and it's only a matter of time before people realise.
The Euro is indicating oversold on my hourly and daily charts (this is NOT trading advice by the way!), so we'll see.
DavidC
This must be the why the sudden plunge in gold, even in Euros.
Yes that must be it. Funny though that everybody waited until the Comex trading started to sell.
Are the comments by Weber really "extremely dovish"?
Seems neutral to me.
What happens in another four months? Extremely, extremely dovish or extremely hawkish?
Yeah. Knowing the guy, I think he meant " In January 2011, everyone in the Eurozone will be on its own. Good luck to y'all"
Chart: DX
USD futures appear poised to break out of a Cup with Handle pattern. Good luck!
http://www.screencast.com/t/NDQ1NmZh
Both parties want to 'tank' their currencies,
euro is overvalued, dollar is overvalued ( if Q.E 2.0
is priced in ), debasing, debasing
What about the Yen ?
I'm still buying Euros between 6.80 and 7 even.
CANNONBALL!!!!! AHHHH!!!!!!!!!!!!!!
Buy'em!!!! Ahhh!!!
Traffic Jams on the roads into Switzerland again,ah the joys of a default summer.
gold is going to break out even if it fell early today.
The Euro is INFLATING.
This must be what they mean by their fascist 'creative destruction'. Hitler loved creative destruction. So does Summers, Greenspan, even Elena Kagan. It's bi-partisan to be fascist, so maybe we should all be fascists? Obviously not. But hey these days it's mainstream to be fascist. Simply being a capitalist is extremism, and you know we are 100 percent against extremism.
Larry Summers seems to think all we need is a little 'creative destruction', perhaps that's whats going on in Europe? Profit off the demise and somehow everyone ends up ahead? America will be stronger by destroying America! So the same must be true of Europe.
Yes, more Weimar policy for Europe please.
These guys are idiots, but not as much as those that follow them. Democrat and Republican, all in for 'creative destruction'.
Greece is the first (the REST are later) to be destroyed, and out of the ashes will come Zeus who will ride on a magic chariot raising orchards of olive trees along the way. So you see, while Greece might be destroyed, it will become better with Zeus and the Olive trees. He'll even bring back Hercules the Legendary Journey's, and turn Yolis good again.
Except, I (and most people) unlike economists left and right, europe, the QUEEN, and America, don't believe in such fairy tales like they do. The fairy tale that is, 'creative destruction'.
Obama believes it, the republicans believe it, Greenspan believed it, hell even the world believes it. What a bunch of fucking fools believing in the tooth fairy. Still feel good about recovery now that every person that controls or controlled our money supply or the belief system they all subscribe to includes Santa Claus and the Easter Bunny? Basically that is.
http://www.larouchepac.com/node/15547
Wow, that cannonballing is scary. But I have a boatload now @ 6.80.
There are certainly a lot of details like that to take into consideration.I read and understand the entire article and I really enjoyed it to be honest.
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