EURUSD Plunges As Draghi Fears Deflation Risks

Tyler Durden's picture

Doing his best not to get dragged into the currency war conversation, ECB head Mario Draghi is, however, concerned at the impact of a stronger EUR on inflation (or to be more accurate dis-inflation). Noting not only that there remain downside risks to the economic outlook, as we highlighted previously (an 11% rise in trade-weighted EUR since July), his comments (that have smashed the EURUSD down 120pips so far) appear to be addressing a surging EUR.

  • *DRAGHI SAYS EURO AREA GROWTH RISK CONTINUES TO BE ON `DOWNSIDE'
  • *DRAGHI: REAL, NOMINAL EXCHANGE RATE NEAR LONG-TERM AVERAGE
  • *DRAGHI SAYS ECB WILL MONITOR EURO LEVEL FOR INFLATION RISKS
  • *DRAGHI STATEMENT SAYS EURO APPRECIATION RAISES INFLATION RISK (or Deflation)

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Sudden Debt's picture

so... a strong euro is bad for gold...

and now the euro goes down...

so naturally... GOLD ALSO GOES DOWN?!?!?!

Sudden Debt's picture

WTF WTF WTF!!!!!!!!!!!!

I HATE THOSE TAKEDOWNS!!

TrumpXVI's picture

Yeah, me, too.

Every time this shit happens I lose about 1K (but only temporarily;-))

EscapeKey's picture

meh i dont know why either of you get so worked up about it. manipulation or not - prices fluctuate, and have for quite a while by now.

Sudden Debt's picture

copper near 4$ even with dropping demand.

gold and silver demand are going up... so prices drop?

WTF!

DeadFred's picture

Dr. Copper is in a serious bind with its trading range. If it drops 2% it will likely drag equities down with it. Want to bet that copper futures are on the manipulation list with VIX? I think the PPT realized it was cheaper to manipulate the underlying parameters the algos trade on than doing outright purchases. I'm sure it will end well.

trav777's picture

gold moved back green, stfu already and stop panicking all the time jeez

TrumpXVI's picture

I have no problem with volatility.

But this stupid CB/political shit is annoying.

Carl Spackler's picture

"Dive, dive, dive"...German U-Boat captain advising Mario Draghi.

fomcy's picture

Not only EUR, but GOLD nosedive 12$ as well. Every Thursday, Like clockwork. Every week same shhht, over and over again. GOLD deferentially been capped below $1700.

Stuart's picture

People need to figure that heaven and earth will be moved by central planners to prevent gold to moving higher in the midst of all the required money printing. Lie, steal, cheat, whatever it takes.  They're circling the wagons protecting FIAT currencies at all cost with the attitude "go ahead punk, whattaya going to do about it?"

 

Broccoli's picture

If you believe your thesis shouldn't you be buying hand over fist at this manipulated price. Unless you think in the long run the central planners will somehow emerge victorious despite a historical track record of 0 - 13000.

medium giraffe's picture

Bingo! Give the lad a biscuit.

Co-ordinated gold sell-offs in order to maintain the percieved relative value, and therefore utility/attractiveness, of fiat are an intrinsic part of the wider global currency management strategy.  If you consider gold to be real money, this would be the only logical recourse if you wanted to continue the facade of assigning worth to the officious looking bits of paper you use as currency.

 

 

 

Yardfarmer's picture

Endgame for paper Au/Ag. Zugzwang. Only super liquidity will keep you in the game. Hold your position and take the pain. It's the only way out.

maxmad's picture

This is like being in the middle of a fire worrying about dying from drowning... Makes no sense... Print Bitchez!

agent default's picture

Mass exodus from the Euro-> USD liquidity tightens.  Everything down.

spastic_colon's picture

....and ES up, thats all that matters, we just paused yesterday so euro markets could catch up and today we have an excuse for equities to resume their undown path

Quinvarius's picture

I think someone got scared when gold in Euros started going bananas this AM.  But these things are temporary and for show.  This is how the big moves up start.  The world goes to Hell.  They run the stops in gold.  Then gold goes nuts to the upside for a few months.

EscapeKey's picture

Why do they even pretend they need to make the case for further QE?

Sudden Debt's picture

for the 99,99999% who call themselves the 99% WHO STILL DON'T GET WHAT'S GOING ON!

EscapeKey's picture

WE DEMAND MORE WELFARE

hang on that works for bankers, too

monopoly's picture

Isn' that absurd. Sell gold, silver because of what this sham Draghi says out of one side of his mouth. Reminds me of that insect Kramer.

Move along, nothing to see here.

GetZeeGold's picture

 

 

It helps to think like a Rothschild.

 

.....A woman who planned to write a book entitled Lies about the Rothschilds abandoned it, saying: 'It was relatively easy to spot the lies, but it proved impossible to find out the truth'".

http://en.wikipedia.org/wiki/Rothschild_family

Stoploss's picture

See? Just like turbo Timmah did at the end of July last year.

Anything over 1.20 and it's a problem.

That number will continue to decrease btw.

scatterbrains's picture

or are they just trying knock Brent down (which isn't working so far) but which is having a minor impact in the rest of the commodity basket ? Looks like they'll have to take equities down if they're going to try to stop the pain for a while.

mvsjcl's picture

Woe arrives when markets move so at the whisper of a minstral.

sablya's picture

Disinflation...the mortal enemy of PMs...it's pretty humorous, except to those who are long silver.  If the USD goes down, and the JPY goes down, something has to go up.  And, guess what Draghi, the EUR is it.  You ease, we ease, they ease, and lo and behold, the relative values are all the same - but if silver and gold don't go up, then something is broken.

Beam Me Up Scotty's picture

Something is broken.  Its called the market for gold and silver.  The invention of paper gold and silver has temporarily created the possibility of infinite gold and silver.  They can manipulate the paper price to whatever price they want.  Sooner or later you won't be able to find any physical metal though.

secret_sam's picture

Markets can't "break," it's just a question of how much the manipulators can bend them.  But every participant is a manipulator, so it all balances out in the long run.

Everybodys All American's picture

Did I say deflation I meant inflation or did I say inflation and meant deflation? Is this is how it ends?

W74's picture

Chart shows a penny drop.

youngman's picture

Disinflation..I don´t see it in my Neck of the Nape.....fees, taxes, insurance, subscriptions...all up...gas up...proteins up...housing is up..or so they say..car prices up..me thinks kemosabe that there is problems in the Comex wigwam .....there is no shit in the babys diaper so to speak with forked tongue

hedgehog9999's picture

he'll pull a rabitt out of his ass now.

falak pema's picture

whts that they say about roller coasters....?

Throw up a coin and you'll know!

Confundido's picture

GET READY FOR THE NEXT TAKE DOWN BY 10:30AM, TO TEST $1,650/OZ...

Beam Me Up Scotty's picture

Take it down.  Take it down to $1500 or even $1200.  I love going out of business sales!!

virgilcaine's picture

The Euro is the noose for challenging Bernanks Dullar! Each day it got a little tighter, until one day it  (the EU) just died. These currency Wars are nasty little things.

Confundido's picture

Dude, the EUR doesn't challenge a thing. The EUR is simply a derivative of the USD.

The real challenge to the USD is gold, which is why it got taken down 18 trading sessions during the last month.

gjp's picture

Precisely.  In this system, everything is a derivative of the underlying US dollar.  So when the US dollar goes, it all does.  Great idea to play fast and loose with the basis for the whole system, Ben.  And all for the benefit of the already obscenely rich.

Atlas Crapped's picture

When confidence and perception management "price" relative value, this is how "discovery" works. Gold will clear all that nonsense up. It speaks louder and broader than a thousand silver tongued devils ...

madcows's picture

Well shit, if I was trying to monetize the debt, I'd be afraid of deflation too.  Fuckin tool.

virgilcaine's picture

I do not understand...deriviative of the USD? It represents a threat to the feds apple cart. The Eu members became enemy no. 1 when the Euro was created, From the Fed's perspective not virgil's. We have a HOT currency War.

 

If u mean it's paper fiat.. yes I would agree of course.

Confundido's picture

Because the EUR is surviving thanks to the fx swaps from the Fed, that keep USD funding at ultra cheap levels, which in turn keeps the EUR banks alive and the EUR corporates with access to USD funding, while the Euros printed by the ECB go to finance the sovereigns of the EU, without crowding out effects.

sbenard's picture

Could someone explain to Mr. Draghi that not ALL dropping prices reprsent deflation? Productivity increases result in lower prices, but they aren't deflation! Popping bubbles bring lower prices, but that's not deflation either! Deflation, like inflation, "is always and everywhere a monetary phenomenon" (Milton Friedman)

Perhaps someone can educate us all on what episode in human history we saw true deflation when central banks were doubling and tripling the money supply every few years! It doesn't happen!

Confundido's picture

I think one could even make the case that deflation, as understood, does not exist. It cannot exist. What people call deflation is actually deleveraging. Under a system of commodity based money and 100% reserve requirement, I don't really think you would have deflation, but constant relative price movements.

Tekrunner's picture

Gold is a deflationary currency, at least as long as the economy is growing and gold production remains low. Under these conditions the same amount of money chases more goods. That's pretty much a textbook definition of deflation.

brucyy's picture

DXY testing 80 ! can't have that !

UNLEASH ZE NUCLEAR PRINTER !