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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.



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Thu, 02/07/2013 - 10:18 | 3222757 Sudden Debt
Sudden Debt's picture

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

and now the euro goes down...

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

Thu, 02/07/2013 - 10:21 | 3222761 Sudden Debt
Sudden Debt's picture

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


Thu, 02/07/2013 - 10:33 | 3222793 TrumpXVI
TrumpXVI's picture

Yeah, me, too.

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

Thu, 02/07/2013 - 10:34 | 3222797 EscapeKey
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.

Thu, 02/07/2013 - 10:37 | 3222806 Sudden Debt
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copper near 4$ even with dropping demand.

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


Thu, 02/07/2013 - 11:26 | 3222943 DeadFred
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.

Thu, 02/07/2013 - 11:38 | 3223003 trav777
trav777's picture

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

Thu, 02/07/2013 - 11:05 | 3222862 TrumpXVI
TrumpXVI's picture

I have no problem with volatility.

But this stupid CB/political shit is annoying.

Thu, 02/07/2013 - 11:42 | 3223021 Carl Spackler
Carl Spackler's picture

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

Thu, 02/07/2013 - 10:46 | 3222819 rogeliokh
rogeliokh'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.

Thu, 02/07/2013 - 11:03 | 3222859 Stuart
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?"


Thu, 02/07/2013 - 11:15 | 3222901 Broccoli
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.

Thu, 02/07/2013 - 12:32 | 3223142 medium giraffe
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.




Thu, 02/07/2013 - 11:08 | 3222868 Yardfarmer
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.

Thu, 02/07/2013 - 10:22 | 3222764 maxmad
maxmad's picture

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

Thu, 02/07/2013 - 10:23 | 3222766 agent default
agent default's picture

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

Thu, 02/07/2013 - 10:24 | 3222770 spastic_colon
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

Thu, 02/07/2013 - 10:35 | 3222800 GolfHatesMe
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Thu, 02/07/2013 - 10:42 | 3222815 Quinvarius
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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.

Thu, 02/07/2013 - 10:21 | 3222760 EscapeKey
EscapeKey's picture

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

Thu, 02/07/2013 - 10:24 | 3222774 Sudden Debt
Sudden Debt's picture

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

Thu, 02/07/2013 - 10:24 | 3222777 EscapeKey
EscapeKey's picture


hang on that works for bankers, too

Thu, 02/07/2013 - 10:22 | 3222762 monopoly
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.

Thu, 02/07/2013 - 10:29 | 3222781 GetZeeGold
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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'".

Thu, 02/07/2013 - 10:23 | 3222768 Stoploss
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.

Thu, 02/07/2013 - 10:23 | 3222769 scatterbrains
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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.

Thu, 02/07/2013 - 10:24 | 3222776 mvsjcl
mvsjcl's picture

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

Thu, 02/07/2013 - 11:12 | 3222890 Yardfarmer
Yardfarmer's picture


Thu, 02/07/2013 - 10:33 | 3222779 sablya
sablya's picture

Disinflation...the mortal enemy of'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.

Thu, 02/07/2013 - 10:59 | 3222848 Beam Me Up Scotty
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.

Thu, 02/07/2013 - 11:47 | 3223039 secret_sam
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.

Thu, 02/07/2013 - 10:30 | 3222788 Everybodys All ...
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Did I say deflation I meant inflation or did I say inflation and meant deflation? Is this is how it ends?

Thu, 02/07/2013 - 10:30 | 3222790 W74
W74's picture

Chart shows a penny drop.

Thu, 02/07/2013 - 10:35 | 3222798 youngman
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 prices thinks kemosabe that there is problems in the Comex wigwam .....there is no shit in the babys diaper so to speak with forked tongue

Thu, 02/07/2013 - 10:37 | 3222807 hedgehog9999
hedgehog9999's picture

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

Thu, 02/07/2013 - 10:40 | 3222808 falak pema
falak pema's picture

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

Throw up a coin and you'll know!

Thu, 02/07/2013 - 10:45 | 3222820 Confundido
Confundido's picture


Thu, 02/07/2013 - 11:01 | 3222852 Beam Me Up Scotty
Beam Me Up Scotty's picture

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

Thu, 02/07/2013 - 10:49 | 3222821 virgilcaine
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.

Thu, 02/07/2013 - 11:03 | 3222826 Confundido
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.

Thu, 02/07/2013 - 11:04 | 3222860 gjp
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.

Thu, 02/07/2013 - 10:52 | 3222832 Atlas Crapped
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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 ...

Thu, 02/07/2013 - 10:53 | 3222836 madcows
madcows's picture

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

Thu, 02/07/2013 - 11:01 | 3222842 virgilcaine
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.

Thu, 02/07/2013 - 11:01 | 3222853 Confundido
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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.

Thu, 02/07/2013 - 11:02 | 3222854 sbenard
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!

Thu, 02/07/2013 - 11:16 | 3222906 Confundido
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.

Thu, 02/07/2013 - 12:07 | 3223119 Tekrunner
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.

Thu, 02/07/2013 - 11:08 | 3222872 brucyy
brucyy's picture

DXY testing 80 ! can't have that !


Thu, 02/07/2013 - 11:09 | 3222875 virgilcaine
virgilcaine's picture

Thanks for the explaination on swaps ..confundido. Though I would challenge the Feds intentions as benevolent toward the Euro.

Thu, 02/07/2013 - 11:14 | 3222891 Confundido
Confundido's picture

Of course they are not benevolent! I never said that! By keeping EUR banks and the Yankee mkt afloat they save JPM, Goldman and BofA from a liquidity colllapse! The holder of USDs gets the bill later, via higher USD inflation.

Thu, 02/07/2013 - 11:24 | 3222922 virgilcaine
virgilcaine's picture

So basically they are killing off the Economy by keeping the Banks alive? Co's can't compete , especially in the Eu,  with the inflation, can't  raise prices, hire workers.. what a messed up system they have created.

Thu, 02/07/2013 - 23:13 | 3224995 SmallerGovNow2
SmallerGovNow2's picture

What a messed up system?  Have you looked at the US system?

Thu, 02/07/2013 - 11:35 | 3222939 Village Smithy
Village Smithy's picture

BK did a nice piece last week talking about how just since Hurricane Sandy the price of an Audi has increased $13,560 relative to a comparable Lexus. You can't spin that away.

Thu, 02/07/2013 - 11:30 | 3222964 brucyy
brucyy's picture

someone bought TFD...

Thu, 02/07/2013 - 11:33 | 3222965 virgilcaine
virgilcaine's picture

True they are all saving their own banker azzes.. so the benevolent point is moot.  They are out to save themselves. All attached to the "Fed nipple of liquidity" hanging on for dear life as the Economy sinks and people starve.

Thu, 02/07/2013 - 11:37 | 3222995 secret_sam
secret_sam's picture

Is it time to buy the fuckin' dip yet?

Thu, 02/07/2013 - 11:48 | 3223030 devo
devo's picture

*Draghi burries head in the sand.

*Draghi has no fucking clue what's going on.

*Draghi calls Jim Cramer for advice.

*Draghi pours a cold one and watches the super bowl on dvr.


Thu, 02/07/2013 - 11:52 | 3223064 eclectic syncretist
eclectic syncretist's picture

Draghi says this, Draghi says that,....who gives a fuck what Draghi says when he isn't doing anything except captaining the ship to oblivion?

Thu, 02/07/2013 - 11:58 | 3223068 medium giraffe
medium giraffe's picture

One of these pressers / events / elections / whatever is going to trigger the black swan sooner or later.  It will probably be something relatively innocuous and wishy-washy that picks up momentum and causes the fundamentals come roaring back onto centre stage. Not sure where or when the trigger will be, but I'm hedging with at least enough popcorn to sit back and watch the chaos - might as well enjoy the graphical spectacle on my charts before the real-world implications make off with my backdoor virginity. 

I would try and short when the fan/faeces inelastic collison finally occurs, but I'm not even sure it would be worth the calorific expenditure of keying the market order in, I suspect the resultant trade and winnings will lack any advantageous context in the aftermath - "congratulations on a well executed trade Mr G, but due to technical difficulties arising from wholly forseen sudden and total systemic collapse we will be unable to honour our agreement with you by sending you your monthly cheque.  Please accept our deepest apologies, we sincerely wish you luck in the coming war and inevitable mass depopulation.  As a final curtesy, we have gone ahead and increased the arbitrary number in your brokerage account to a higher arbitrary number.  We hope that you can take at least some comfort in your final agonising moments knowing that you were at least on the right side of the trade". 

Anyway, Russian jets over Japan?  S&M500 threatening 1500?

Moar popcorn!

Thu, 02/07/2013 - 12:06 | 3223114 Grand Supercycle
Grand Supercycle's picture

Wile E. Coyote sell off awaits...

SP500 daily chart choppy downtrend commencing.

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