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Is The Risk Rally Over? John Taylor Puts Out New EURCHF Target Of 1.20 By May
Is the Risk Rally Over?
By John R Taylor/Jonathan Clark, FX Concepts
Ireland’s request for aid rumored to be €80-90 billion was not well received by the financial markets. Credit spreads initially narrowed, only to widen again. Equities initially traded higher and the DAX reached its highest level in 18 months, but then reversed direction and closed lower on the day. It is a bad sign for an uptrend in risk assets when they fail to rally on what should be positive news. However, even with a bailout package, many problems remain for the Irish. The main problem for Ireland is that it looks a bit like Iceland. The size of the potential losses for their banks is estimated at €85bn, which is half the size of the GDP. Politics are a looming disaster. The Green coalition partner stunned Brian Cowen’s Fianna Fáil party by calling for an election within two months, and the 2 critical Independents are in revolt. Since the long-term cycles are calling for a peak in risk assets between now and the middle of December – and are well within one standard deviation – we are especially vigilant of signs that a high may have already been seen.
There are other problems in the European periphery other than Ireland. If a bailout of Ireland leads to contagion in Portugal and Spain and they see their funding costs rise further this will increase the odds the major decline has begun. Equities are also a good barometer of risk appetites and the Spanish IBEX has already broken below the uptrend support from the low in June. If the Portuguese PSI 20 closes below 7,665 joining the IBEX this would be enough to push us out of long positions in European equities. In the currency markets one of the best indicators of stress is EUR/CHF as the crossrate reflects money from the Eurozone flowing in and out of Switzerland. The cycles argued the crossrate would strengthen into next week before peaking and that it could trade as high as 1.3725, but the upmove reversed on Monday. Although the short cycles call for weakness, if the upmove remains intact, it will hold above the support at 1.3380 and will make a final upmove into the middle of next week. It now appears the resistance at 1.3650 will hold and if risk does survive here, this level should be a good place to sell as the crossrate should then turn lower and begin a downtrend lasting into May. A close below 1.3380 signals it is headed lower into the middle of December and our initial target will become 1.3100 and the 1.2000 area could be seen by May.
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Your headline is wrong Tyler. Eur/Chf
Headline is confusing at best... The article says: "In the currency markets one of the best indicators of stress is EUR/CHF as the crossrate reflects money from the Eurozone flowing in and out of Switzerland."
But after saying that all it talks about is the EUR/USD trade. So how much money is actually flowing in and out of Switzerland?
The scene in V for Vendetta with the dominoes suddenly sprang to mind.
Dolla Dollar Bill, Y'all!
http://shirtoid.com/wp-content/uploads/2010/02/dolla-dolla-bills-yall.jp...
May? Guess he doesn't understand dimminishing returns under a collapsing monetary system.
Not saying it WILL happen, but one could see that being breached by/in January.
Sort of like central bank interventions.
But we're in bizarro monetarist bailout world, so who knows what happens.
Breaking: Obama refuses to pardon "panic" this years whitehouse turkey.
Now thats the bizarro world I half expect.
Someone really should put an end to this "risk-rally" misconception. It's not a risk trade. It's a "get out of fiat currency" trade.
That's correct. And the outcome of that should benefit US equities as money will need to flow into what the world considers a safe haven.
Harry, are you really Abby Joseph Cohen, in a skirt, with hairy ass legs?
Switzerland is so expensive. I am not sure what the make there to be so rich. Chocolate?
i don't think so. this is definitely "get out of risk trade" or as the song goes "nowhere to run to, baby...nowhere to hide."
"You can check out anytime you want but you can never leave"
PSI20 closed at 7617 pts, down today 170 pts (-2.18%). Both major private banks, BCP and BES, saw their price targets seriously reduced by friendly Deutsche Bank.
There is a very serious possibility we have a BANK RUN December 7th. Please watch and share this video with the people you care about (http://youtu.be/U0KGv3Xw0KY). Thank you.
Anonymous-
This is really scary guys, people are already talking about it and it has spread from France to the UK and now coming to the United States.
Yeah really Eric Cantona will bring down the banks. This is silly.
What will look silly is the world banksters as everyone closes their bank accounts.
It is pretty funny. Another end of the world scenario so let's all jump on board situation. Only to see said bank run fizzle as a major futbol game airs on 12/7. Soccer or bank run?? You know what wins in that case in Europe.
a whole 740 people watched this.
Well, the banks are in really deep doo-doo, despite the slight of hand The Bernank and central bankers everywhere have played passing lots and lots of cash to them.
Presto Poofo!
Euro 120 by January, 90 by May 2011. PIIGS will be tossed out on the st. It's protect the
Eu core theme.
TD we may have to add decoupling into the lexicon with contagion.. if Gold keeps zooming ahead, away from the USD.
That may be the definition of a parabolic blow-off top.
2000 gold is on the horizon. If Eu goes panic mode. Then 3k's when it hits the US?
Fear there's nothing quite like it..