Euribor Declines As Euro Extends Slide To 100 DMA, Europe Poised On Verge Of Relapse Into Full-Blown Crisis Mode

Tyler Durden's picture

The most stable correlation in recent months continues to persist with the EUR dropping further earlier today to a fresh 3 week low, on more bad news out of Europe, yet coupled with a decline in interbank rates. The EURUSD printed at 1.2811, mere pips away from the 1.2800 100DMA (at the same time as the EURCHF plunged to below 1.36 after hitting a high over 1.38 yesterday). As expected, this has led to a decline in the Euribor rate, whose fixing came at 0.899% (3 Month), versus 0.903% previously. Both 1 Week and 6 Month Euribor also declined. The ongoing macro weakness in Europe is predicated on two big macro events: the confusion surrounding Slovakia's refusal to participate in a Greek bailout, as well as rumors of another round of ECB purchases in the Irish 6 and 9-month (€0.5 Billion each) T-Bill auctions, which priced at 2.458% (previous 1.367%) and 2.81% (previous 1.800%), respectively. The Bid To Cover was 3.6 and 3.1, versus 2.8 and 3.4 previously. Further underscoring Europe's own relapse into a PIGGSy inferno, was Greece's announcement of May unemployment at 12%, versus 9.5% last year, but more relevantly, the country's GDP declined more than expected, coming in at -3.5% from last year, on expectations of -3.3%, and a 1.5% QoQ (-1.0% exp). They should just wait to see what happens when all the strikes are factored in. All in all, it should prove to be another interesting session.

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Mad Mad Woman's picture

Here we go again. I get so tired of these summer repeats.  :-)

jbc77's picture

For a while it seemed as if the Euro crisis had fully abated. Poof. Everything was under control, or so the masses were told. I miss the Euro debt crisis, I'm glad to see it finally come around again rearing it's ugly head. Just once I'd like to see the central bankers grab their ankles and take it up the rear real nice.

Max Hunter's picture

yeah.. it's like an old girlfriend or porn DVD that you never threw away and bust out every year or so.. LOL

Dismal Scientist's picture

Was it ever in doubt ? The Euro falls through the ugly tree and hits every branch on the way down. A 'currency' that has no business existing in its current form in the first place.

Dismal Scientist's picture

Germany + the Nordics that didn't want to play in the first place ? I struggle to see why they would want to play with anyone other than Germany, to be honest. France, Belgium are in poor shape, and Austria is too Eastern Europe facing. Remember France remains Germany's single biggest trading partner, they will go to the next phase together. So am not buying a Nordic Euro yet

youngandhealthy's picture

Nordic Euro is allready there. It is called NOK and SEK.

LeBalance's picture

EURUSD through the 100 DMA (1.280000), printing 1.2791 with a low earlier of 1.2784 (0815 EDT). (source: netdania).

Moonrajah's picture

I guess zee Germanz are okay with that.

Amsterdammer's picture

Another macro data worth 'worrying': industrial

output in Europe down 0,1% in June

Could this be the PBOC selling its 'euros'or the

SNB 'destocking', crazy FX market

MrTrader's picture

For all wanna be currency dealers here : retail investors are still short EUR/USD for weeks. Sorry guys, you are on the wrong bandwagon. But fi you want to play further JPY strength, this might be a very good idea ;=)

THE DORK OF CORK's picture

Ireland is in trouble because its private external monetary debts are absurd.

The fiscal problem is a distraction.


Germany ,France and London will have to take losses of many 100s of billions if Ireland is to remain in the Euro.

John Bull's picture

Dear Dork,


Can you elaborate on that?



THE DORK OF CORK's picture

Our monetary banking institutions owe many 100s of billions in external debt while fiscal debt is in the region 85 - 90 billion euros.

The Fiscal debt is not really the problem here - they are deflating the entire domestic economy to pay as much private debt before collapse.

We owe German banks 200 billion euros + alone.

If the ECB continues to have its finger up the hole of its client banks then soon they will participate and be the major cause of a massive hyperinflationary event Europe.


The ECB needs to start bidding up gold massively to protect the treasuries of Germany , France and Italy - then the holders of Irish and Iberian paper will be in a postion to take a loss and remain solvent.

ElvisDog's picture

As long as the amount of debt destruction is higher than the rate of debt/money creation, you won't have either inflation or hyperinflation. I like the bathtub analogy. As long as more water is flowing out through the hole in the bottom of a bathtub than there is water coming in through the faucet, the bathtub won't overflow.

romanko's picture

This whole "debt destruction" theory doesn't make sense. When a debt is defaulted on or written off, it doesn't imply that the associated money that was created when said debt was issued is somehow destroyed. If I borrow $100 from you to spend on lap dances, then I dafault, yes from your perspective, $100 has been "destroyed", but you're forgetting the stripper now has that $100 and she's spending it on crack and pizza - it remains in the economy, and it's inflationary potential exists irregardless of whether the loan that created it is defaulted on or not.

Lux Fiat's picture

Short term, the stripper may be spending $100, but there might be some "wealth effect" impact on the person who loaned the money in the first place, thinking that their loan represented an asset, instead of a big zero.  So some level of contraction would likely occur, although it might not be at the full level of the defaulted amount.  Longer-term, the money lent will not be there to spend or reloan when the original due date comes about.  A case could be made that the true impact of a default occurs in the future.

iPood's picture

This should drop another turd in the kiddy pool. I apologize if it has already been posted. Have a great day!


Lux Fiat's picture

Party pooper!  Everyone was thinking that it was a Baby Ruth floating their way this summer, and now you had to go ruin the illusion.  Just waiting to see if folks start screaming and scrambling to get out of the pool.

Grand Supercycle's picture

DOW and SP500 bearish megaphone wedge charts continue ...