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Goldman Out In Full EURUSD Destruction Mode
1. EURUSD– Now decisively breaking the uptrend from the February ’02 lows at 1.3098
- Adds to the underlying negative picture with a test of the prior lows from March-‘09/October-’08; 1.2457-1.2329 likely
- Beyond there the low from November ’05 stands at 1.1640 and the ABC equality target from the July-’08 highs stands at 1.1434
- If the market does bounce sharply the first notable resistance would be the interim low from 28th April at 1.3114 and also the psychologically significant 1.30
2. Inverse-EURUSD overlaid with 10-year Eurozone-Periphery/-Core Spreadbasket– Continues to imply much lower levels for EURUSD
- This chart is an update of the one we’ve shown a few times over recent weeks
-
It’s inverse-EURUSD in green (higher is EUR-weakness) overlaid with an
equally weighted basket of Greek, Italian, Spanish, Portuguese and
Irish 10-year yields versus those of Germany
- The spread basket has now spiked significantly higher and in pure overlay terms implies EURUSD sub-1.10
-
While the point for point correlation may well weaken, this does still
seem very important as moves in the spread basket have tended to lead
those of EURUSD itself over recent months
Chart Source: Aspen Graphics Data Source: Reuters
3. Spanish 10-year yields– Purely technically speaking, this looks like something we need to keep a very close eye on
-
As detailed in previous notes sharp downside moves in EURUSD over
recent months have tended to be lead by widening in
Eurozone-Periphery/-Core spreads
-
Greek and Portuguese yields have already widened significantly versus
Germany, but purely technically speaking, a significant spike higher in
Spanish yields now also looks a real risk
-
10-year Spanish yields are now breaking the downtrend from the July ’08
highs, and are also moving above the interim high from January ’10 at
4.19%
-
The next resistance stands at 4.46-4.48%, but the wedge like nature of
the price action since the July ’08 highs makes a re-test of that high
itself at 4.94% look quite feasible
- Please note, the above is purely based on technical/price action analysis
4. EUR/Broad Index– Now only approximately 0.5% from the major lows from November ’05
- As with the multi-year uptrend on EURUSD which stood at 1.3098 we may see some consolidation against this level…
-
…however, given the broad correlated market backdrop and the setup on
important components such as EURUSD it’s difficult to actively argue
for a notable bounce/stabilisation
- Our EUR/Broad Index shows the performance of the EUR versus an equally weighted basket of the “Old World G10” currencies
5. 1-year EURUSD/USDJPY implied vol. spread– EURUSD vol. looks set to rise significantly further versus USDJPY
- We included this chart in the Charts That Matter Next Week a few weeks back
- It implies that EURUSD 1-year implied vol. rises significantly versus that of USDJPY
-
It’s moved quite a bit already, but if viewed as a double bottom/swing
within the cyclical range the spread looks set to move significantly
further in favour of EURUSD vol.
-
The cyclical high of EURUSD 1-year vol. over USDJPY 1-year from January
’09 stands at approximately +4.5 vols. compared with the current +0.56
- In the current environment it would seem reasonable to assume higher EURUSD vol. would be associated with lower-EURUSD
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SNB just pulled the plug on 1.4325. EUR/CHF down like a cheap whore.
Holy capitulation Batman!!!!
I check that pair now and then just as a tourist, seeing what the ideal fixed market looks like.
It really must be the end of an era.
:-) The SNB accumulated something like 30 billion EUR in the previous quarter while holding the line on a much less violent move. That might suggest the sharp move over the last few days brought in much more. At that rate tiny little Switzerland is set to be a counter-weight to the entire Eurozone.
The proprietary indicators I use can identify trend changes before they occur and they have been warning of a USD rally since last year.
Just posted a new EURUSD chart: showing long term trendline with important support around 1.2770
http://www.zerohedge.com/forum/latest-market-outlook-0
There's nothing more satisfying to the soul than a good old fashioned pig pile, unless you're on the bottom. Goldman's been bottom pig for the past few weeks with their....er....legal issues, but it looks like they were able to wiggle out like the greased pig they are and have jumped back in as top porker.
Ya gotta admire Goldman. No shame, no conscious, just utter devotion to the only God that matters to them. Money. In fact, I think the money itself is secondary to the real fun derivied from stealing it the old fashioned way.
At Goldmammon, the end justifies the means...
Yea but for them it's looking more and more like their means are becoming their end!
Hmmm.....
a currency crisis brewing for the Euro, considered a viable alternative to the USD by many for "reserve" status...
funding/solvency issues for Eurozone countries....
the ECB will have to eat it and print more money....
Germany is pissed....
the US Dollar lives another day....
the Chinese stock market took another 4% haircut overnight....
might not want to be short US stocks only because of "safe haven" status currently...
be interesting to see how the Aussie and Loonie respond to this crisis, last go around the Aussie was maimed...this time....not so much, yet....
remember, the Europeans were yelping about the Euro being too strong (for exports), so in this respect they're ok with this....
on the other hand, there is a need for more gradual change....
Europeans are hard money types. As I read more about the history of US coinage, when the US started minting gold coins it was often hard to keep them in circulation because the Europeans would ship them all back to Europe. And, if you recall, it was the likes of France who were demanding gold for dollars back in the 60s and 70s that forced Nixon's hand and finally formally ended the "gold standard"--the theoretical interconvertibility of US currency into gold.
Thus, demand for gold should be sky high....
as an Aussie looking to buy PM's, the AU$ is getting maimed next to AU (PM) ... AUD$1225 April 15th, AUD$1305 right now!
Don't forget the French doing that was a scam. With other imperial monetarist U.K. in the mix as well. See sterling drop ~'67.
Here go into vietnam to save our ass
Here now you are in and spending too much money, give us your gold.
Hey but we're helping you.
So.
Thus why monetary games are so stupid. Obviously the french laid the trap and we fell right into it.
We should of told France Dien Bien Phu-y on you. Instead they laughed all the way to the end of the gold standard.
Then without gold, guess what came next, derivatives. Inter-Alpha group has love these long time ever since.
Now it no longer takes 5 dollar for sucky sucky.
Would this of been the case without Vietnam? Perhaps, but in the real world, this IS what got us off the gold/silver standard.
Anybody who bought gold with Euros last summer is making a killing - the ramp up in Gold last autumn and now the Euro being taken down is giving Euro returns well north of 30%.
Question is when to get out?
Not yet, but there is a point where every man & dog is bullish gold...
When people are able and willing to pay down any remaining debt - that is the time to get out although populist momentum may take it further.
I believe we are only half way to destroying unsustainable debt so we have another few years left in this fiat fiasco.
Gold is making a mockery of debt.
Yesterday ECB says they wont pay any attention to the US credit rating agencies. S today Moody's says very Concerned about contagion risks. Hahahaha. This really feels like currecy warfare. It will be most salubrious if the Euro were bogged down in structural concerns, its citizens burning things and rioting . At least in the US the looting is nice and orderly.
Heck, we might see 1.24 on the Euro today, it is falling apart
Yeah - just interpolate between the Drachma/Peseta and the D-mark to get an rough idea of where the Zeuro should trade. It has been trading like the King Of The Hill - the Quasi Gold Standard - the Immaculate Currecy of Currencies ( that was at 1.60). It should stop dropping well ahead of its intrinsic value though - just for cultural reasons.
The Aussie dollar has been this seasons Immaculate Currency. Every doctor and dentist in Asia owns it - because of the 4% yield. They dont sem to get it - that you can lose one years' yield in about 5 minutes! Expect AUD to head towards its intrinsic value too.
Just saying:
(reproduced from Shadow Stats . com article on Money Supply :: John Williams)
"No Deflation. The U.S. has not seen annual CPI deflation since several periods of minimally lower prices in the late-1940s through the mid-1950s (the latter being outside of a recession). Of the nine official recessions since 1950, none of them were deflationary. The last significant deflation seen in the U.S. was during the Great Depression, thanks to a sharp contraction in the money supply, which, in turn, was due to a large number of bank failures and lost deposits.
As discussed in the February 11, 2008 SGS newsletter, and partially repeated here, Federal Reserve Chairman Ben Bernanke addressed deflation risk in a November 21, 2002 speech he gave as a Fed Governor to the National Economists Club entitled "Deflation: Making Sure ‘It’ Doesn’t Happen Here."
Attempting to counter concerns of another Great Depression-style deflation, Bernanke explained in his remarks: "I am confident that the Fed would take whatever means necessary to prevent significant deflation in the United States …"
"Indeed, under a fiat (that is, paper) money system, a government (in practice, the central bank in cooperation with other agencies) should always be able to generate increased nominal spending and inflation, even when the short-term nominal interest rate is at zero."
"Like gold, U.S. dollars have value only to the extent that they are strictly limited in supply. But the U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost. By increasing the number of U.S. dollars in circulation, or even by credibly threatening to do so, the U.S. government can also reduce the value of a dollar in terms of goods and services, which is equivalent to raising the prices in dollars of those goods and services. We conclude that, under a paper-money system, a determined government can always generate higher spending and hence positive inflation."
The Fed has the will, the perceived mandate and the ability to create as much new money as is needed to prevent a deflation in the prices of goods and services, as measured by the CPI."
TARGET.