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Euro Sells Off Following Comments By Banque De France Governor Noyer

Tyler Durden's picture




 

...But did traders pick the wrong currency to sell? Tonight's prompt sell off in the Euro is now being attributed to comments by Banque de France Governor Christian Noyer who said monetary easing creates the potential for global imbalances. While it is true that Noyer stated that The European Central Bank will keep its emergency measures as long as needed, this is not news. Obviously all of Europe is now reliant solely on the ECB's bidding of last resort for each and every failed bond auction and to prevent bond routs in the secondary market. Again: this is not news. Yet what is interesting is that instead of selling off the EUR, traders may have picked the wrong currency. To wit: Noyer was actually blasting the pegged CNY, which means that the CNY-derivative currencies, the AUD and the NZD should have taken the brunt of tonight's action, and in the wrong direction at that. And, ultimately, the target was the USD. The moment this became clear (9pm Eastern) is when gold took off.

Confirmatory headlines:

*NOYER: MORE FLEXIBLE YUAN WILL HELP IT PLAY BIGGER WORLD ROLE
*NOYER SAYS YUAN ISSUE WON'T BE RESOLVED RIGHT AWAY
*NOYER SAYS CURRENCY, COMMODITY, CAPITAL-FLOW VOLATILITY RISING
*NOYER SAYS NATIONS CHALLENGING EACH OTHERS' POLICY NOT GOOD
*NOYER URGES DE-LINKING RESERVES GROWTH, EXCHANGE-RATE POLICY
*NOYER URGES EFFORT TO ADDRESS GLOBAL CAPITAL FLOW VOLATITILITY
*NOYER SAYS MONETARY EASING CREATES POTENTIAL FOR IMBALANCES
*NOYER SEES DOUBT ON CONSISTENCY OF MAJOR ECONOMIES' STRATEGIES
*NOYER: SOME VOLATILITY MAY BE INDUCED BY OFFICIALS' POLICIES

In other words, Noyer indirectly attempted to push the EURUSD. And failed... Was that the extent of Europe's intervention for the evening?

 

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Sun, 11/28/2010 - 23:33 | 760120 rich_maverick
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All these currency interventions fail.  The game is coming to an end.  The FX markets see past the politicians and the lies.  In the end, nothing that is FIAT survives.

Mon, 11/29/2010 - 07:55 | 760557 El Hosel
El Hosel's picture

    No housing bust in China, these "Mini-pads" are the new "alternative housing", priced per square millimeter rather than the outrageous thousands per square foot. 

 

http://www.spiegel.de/fotostrecke/fotostrecke-57762.html

Sun, 11/28/2010 - 23:33 | 760122 mikla
mikla's picture

LMAO.

Nobody's trading technicals *nor* fundamentals.

Everybody is trading a few choice and accidental random words by politicians.

And, we *know* what that is worth.

LMAO.  Still laughing.

Mon, 11/29/2010 - 00:07 | 760196 Charles Mackay
Charles Mackay's picture

Right. What is the Euro, or dollar, or any currency really 'worth'? 

Don't think anyone has an answer for that.  All these currency movements are like Robotraders wildebeasts, scrambling in a different direction after every small scare.

Mon, 11/29/2010 - 02:25 | 760408 Eternal Student
Eternal Student's picture

Money is basically trust.

And we're in a global race to the bottom.

Mon, 11/29/2010 - 03:10 | 760442 StychoKiller
StychoKiller's picture

Correction!  Fiat Currency is based on trust (faith, call it what you will!), AND NOTHING ELSE!  Money is backed by tangible reality.

Mon, 11/29/2010 - 04:11 | 760481 Eternal Student
Eternal Student's picture

We'll have to disagree on that one.

Sun, 11/28/2010 - 23:37 | 760131 Mitchman
Mitchman's picture

1.31815.  This is the second time this year we've been blogging the euro falling like a rock.  This is global insanity and I don't think it has much to do with Noyer's comments and a lot to do with the market smelling a rat in the whole system.  The works are rotten to the core and when trading opens in Europe tomorrow, let's see what happens to those Portuguese CDS spreads.

Sun, 11/28/2010 - 23:45 | 760141 vote_libertaria...
vote_libertarian_party's picture

I'm looking at Bloombergs currency ticker time stamped 22:41 and it shows EURUSD basically 'unch'???

Sun, 11/28/2010 - 23:47 | 760143 vote_libertaria...
vote_libertarian_party's picture

Plus it looks like Yahoo Finance has a real time quote that show minimal change???

Sun, 11/28/2010 - 23:55 | 760164 erik
erik's picture

http://www.forexrate.co.uk/new_forex_charts/eurusd.php

I use this for live EUR-USD tracking

Mon, 11/29/2010 - 00:00 | 760181 Minion
Minion's picture

It's already retraced half the "sell off".  News events don't cause price movements, they trigger pent up potential.... and there didn't appear to be much.  :D

Mon, 11/29/2010 - 00:16 | 760214 Quinvarius
Quinvarius's picture

It was a blow off top in the Dollar...I hope.  I don't like it when my predictions of Dollar doom are wrong, or interfered with, or remotely delayed.

Mon, 11/29/2010 - 00:28 | 760244 erik
erik's picture

Shouldn't the dollar strengthen even more with the positive ISM and ISM Services reports forthcoming?

The QE2 weakness was already sold in the dollar.  Until the economic numbers deteriorate or QE3 is rumored, I think the US dollar only gets stronger.  Especially if the Euro situation weakens even further.

Mon, 11/29/2010 - 00:59 | 760300 Id fight Gandhi
Id fight Gandhi's picture

And stocks will sink. We all saw the same damn thing happen in may. Only this time we have more than just Greece.

Mon, 11/29/2010 - 01:26 | 760342 erik
erik's picture

I am not sure stocks will sink.  If you look at May, it is a tough comparison because of the flash crash.  My initial belief was stocks would sink for the same reasoning.  Now I think going after the Euro is safer than going after stocks (if Euro rallies a bit).  Unfortunately, stocks have not sunk with the Euro so far like they should have given how much the Euro has already sold off.

Mon, 11/29/2010 - 06:17 | 760529 Id fight Gandhi
Id fight Gandhi's picture

It was more than just a single event flash crash. Were getting flash crashes in stocks every day, it's a matter of time before another. The flash crash just took out retail investors.

I don't see euro going up. Yields haven't moved or moved up, not good for europe. Look to beligiums auction, it'll move the rest more.

Mon, 11/29/2010 - 09:53 | 760665 erik
erik's picture

With the sizeable jump in Spain yields today, the US stock market seems to be whistling past the graveyard.  On 22nd and 23rd of November we saw similar EUR-USD action and it led to the market being down 1-2%.  I expect with similar action today that we will be re-testing the 1175 zone in the S&P.

Mon, 11/29/2010 - 02:04 | 760387 Spitzer
Spitzer's picture

I think the US dollar only gets stronger

for how long ? a week or two ?

Mon, 11/29/2010 - 03:13 | 760447 erik
erik's picture

why will the US dollar weaken?  it has already dropped dramatically during the QE2 selling phase.  the only weakness it could find would be if QE3 is rumored, or more stimulus, or economic weakness suddenly develops in the US.  i know the Fed wants it weaker but i'd say Europe problems are beating the USD in the downside battle and will continue to do so over the next couple of months.

these US dollar cycles have been in the 6-9 month range lately.  i'm not saying it will strengthen, i'm just saying the evidence suggests the US dollar should continue to strengthen.

 

Mon, 11/29/2010 - 03:58 | 760475 Spitzer
Spitzer's picture

but i'd say Europe problems are beating the USD in the downside battle

The Euro is up as we speak, the ball is back in the dollars court.

these US dollar cycles have been in the 6-9 month range lately.

Yes with lower highs which still means down.

Mon, 11/29/2010 - 08:13 | 760564 jbc77
jbc77's picture

Wouldn't the coming bailouts in Spain & Portugal cause dollar strength if only for a short term? We've seen this play before. Longer term we know the fed wants to cheapen the dollar like a toothless crack whore but I beleive the euro disaster takes precendent here....

Mon, 11/29/2010 - 10:09 | 760689 erik
erik's picture

The market is adamant to force the EU's hand with regard to Spain.  We will see the stock markets and Euro move higher on a Spain bailout for a day, then we should expect to see weakness once again.

Spain yields are at 5.35%.  It took Greece at 9% plus before a bailout was officially made on May 2nd.  It took Ireland at nearly 9% before a bailout was made.  So Spain has a long way to go.  Portugal at 7% is closer.  It would take at least a month for Spain yields to move to the 7-9% range based on how Greece and Ireland played out.  We could be looking at a January bailout of Spain.

Mon, 11/29/2010 - 01:47 | 760363 Orly
Orly's picture

Exactly.  Looking at the Ichimoku cloud, the USDJPY burst up through all resistance on a down cloud, almost parabolic.  Of course, we could be wrong but my charts concur with your opinion that this is a blow-off top, at least in the USDJPY.

Strange things are afoot at the Circle K...

Mon, 11/29/2010 - 02:50 | 760430 UGrev
UGrev's picture

+1 just because of the B & T reference :)

Mon, 11/29/2010 - 03:08 | 760441 Orly
Orly's picture

Be Excellent to each other, UGrev...

And Party On, Dudes!

Mon, 11/29/2010 - 00:18 | 760217 erik
erik's picture

So Ireland 10 year borrowing rate is at 9.20% as of Friday.  They get a bailout at 5.8% tonight.

Portugal 10 year borrowing rate is at 7.00% as of Friday.  Doesn't Portugal now have an incentive to get a bailout as well?  Why would Portugal want to borrow at over 120 bps higher than they could from a potential EU bailout?  I understand they don't want to lose their sovereignty, but 120 bps is a lot of future interest cost.

What happens when these countries don't grow out of these problems over the next 3-5 years?

Mon, 11/29/2010 - 00:27 | 760236 TemporalFlashback
TemporalFlashback's picture

Portugal will be bailed out next. In 3-5 years, I bet the EMU no longer exists (at least as it operates at present).

Mon, 11/29/2010 - 01:02 | 760305 Id fight Gandhi
Id fight Gandhi's picture

Plus greece got 4.5 years extension on payment because, well paying things back is kinda hard, just keep kicking it forward. I'm sure the Greeks will be earning more.

Why should anyone pay anything anymore?

Mon, 11/29/2010 - 00:20 | 760224 steve from virginia
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The answer is, "Yeah, probably..."

Mon, 11/29/2010 - 00:28 | 760243 knukles
knukles's picture

It's all Yuan's fault. 

LOL

Whatever, in a pinch'll do. 
This is getting embarrassing.

My Bolivar is unaligned with my coussionteme.

Who was it that asked if these were smart people acting dumb or just dumb asses acting?

Mon, 11/29/2010 - 00:29 | 760247 knukles
knukles's picture

Did Noyer pick the wrong currency to mention?

Mon, 11/29/2010 - 00:47 | 760278 Dan The Man
Dan The Man's picture

----

he needs the "flying penis" treatment

Mon, 11/29/2010 - 00:55 | 760295 Jim in MN
Jim in MN's picture

Anything to remove attention from the Irish public's running with scissors...toward 'important' asses known as bondholders. 

Mon, 11/29/2010 - 02:24 | 760406 omi
omi's picture

It's not much of a sell-off. If we get to 1.2800 there's somewhat of a concern, otherwise this is a normal trading range.

Mon, 11/29/2010 - 02:30 | 760414 HarryWanger
HarryWanger's picture

I think the problem here is you focus on micro problems outside of the US. Every indicator here is showing growth. Holiday sales up big. Where did they get the money? Things aren't that bad. Ignore the gloom

Mon, 11/29/2010 - 03:07 | 760440 UGrev
UGrev's picture

When you stop paying your cc's, mortgages and sell your food stamps.. sure, you actually have some extra cash. But I'd love to see your cited sources on the planet in which you saw a "big" increase in sales. More to the point, I seriously hope you weren't saying that in the context of just the black friday retail sales (which were ABYSMAL). On my planet, a %0.03 increase from 10.66 to 10.69B in retail is not "Big" by any measure.. in fact, it's fucking horrible.  We had a 1.9% inflation from 2009 to 2010 which means that to break even , we'd need a number closer to 10.88B (rounded up). 

Mon, 11/29/2010 - 03:14 | 760448 jeff montanye
jeff montanye's picture

the breakup of the eurozone is micro?  or are all problems outside of the us micro (unless us involved, especially with shooting)?

Mon, 11/29/2010 - 05:47 | 760519 John Law Lives
John Law Lives's picture

Thanks for the ongoing comic relief you provide.  You do a good job as the thread clown.

Mon, 11/29/2010 - 02:41 | 760424 ForWhomTheTollBuilds
ForWhomTheTollBuilds's picture

I liked the Johnny Bravo troll better.  He would stick around and argue when people slammed him for this simple minded observations, passed off as wisdom.

 

This "drive by argument" stuff is tiresome.

Mon, 11/29/2010 - 02:58 | 760432 Millivanilli
Millivanilli's picture

Two Irishmen, Patrick Murphy and Shawn O'Brian grew up together and were lifelong friends. But alas, Patrick developed cancer, and was dying. While on his deathbed, Patrick called to his buddy, Shawn, "O'Brian, come 'ere. I 'ave a request for ye." Shawn walked to his friend's bedside and kneels.

"Shawny ole boy, we've been friends all our lives, and now I'm leaving 'ere. I 'ave one last request fir ye to do."

O'Brian burst into tears, "Anything Patrick, anything ye wish. It's done."

"Well, under me bed is a box containing a bottle of the finest whiskey in all of Ireland. Bottled the year I was born it was. After I die, and they plant me in the ground, I want you to pour that fine whiskey over me grave so it might soak into me bones and I'll be able to enjoy it for all eternity."

O'Brian was overcome by the beauty and in the true Irish spirit of his friend's request, he asked, "Aye, tis a fine thing you ask of me, and I will pour the whiskey. But, might I strain it through me kidneys first?"

Mon, 11/29/2010 - 03:11 | 760443 omer10
omer10's picture

Here is sthg I thought now: Before que2 announcement at around end of August Eur$ was at 1.27s, the central bankers knew Ireland was coming, and trigger contagion talks, $ to potentially surpass May highs. -even we knew this was coming-. Now after all this run $ is almost back at those levels against euro, PIGS issues will be in the backburner till -I dont see how they can ba solved in the foreseeble future-. even Italy is discussed seriously now. 

My point is could this be the real reason QE2 announced, defined a bit widely: not to let $ surge?

Consider also this data from US seems will be getting better than any other country, except maybe germany in the coming quarters..

Mon, 11/29/2010 - 04:09 | 760480 Spitzer
Spitzer's picture

the data is getting better in the US ?

From what US states ? At least the ECB/Euro has a decent economy in Germany but does the FED/Dollar have an equally healthy state ?

Mon, 11/29/2010 - 06:42 | 760537 Hubbs
Hubbs's picture

I've wondered about that too. Actually QE2 all just part of a balancing act-to prevent a failed auction here in US yet not let the dollar climb against foreign currencies.

Mon, 11/29/2010 - 03:24 | 760453 omer10
omer10's picture

better than from any country except Germany in the Eurozone, I meant..

Mon, 11/29/2010 - 05:46 | 760517 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Can't print oil.  Can't print metal.  Can't print finite resources.  Can't print ingenuity.  Can print porno.  Blackhawk Ben likes his paper.

Mon, 11/29/2010 - 06:39 | 760534 Hubbs
Hubbs's picture

I've wondered about that too. Actually QE2 all just part of a balancing act-to prevent a failed auction here in US yet not let the dollar climb against foreign currencies.

Mon, 11/29/2010 - 08:17 | 760566 johngaltfla
johngaltfla's picture

The dollar has longer to run. Plus the threat of the CONgress stepping in it again during the next twenty plus days is a threat people should be taking seriously. A failure to extend the Bush tax program is worth a 9 handle, maybe even a 6 on the S&P not to mention a wipe out of the dollar carry trade for the short term.

Mon, 11/29/2010 - 08:17 | 760567 TradingJoe
TradingJoe's picture

The Dumb, are buying at these levels, the Smart, sell some and hedge the rest! Then wait and see, it all coming down!

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