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ECB's Record Low Interest Rate Is Negative For The.... Dollar And The Yen
Whoever said the New Normal would be boring, apparently never lived in a world in which one central bank crushing its key rate to a record low, would lead to the appreciation of its currency, and send the main competing currency, the USD, lower. And since we live in just such a world, we expect that when the ECB has to cut its deposit rate to negative next, people will line up around the block to pay the bank money so it can hold their deposits for them. In the meantime, the EURUSD squeeze continues, and the irony is that the move which is supposed to help Europe's export economies and push the currency lower is already resulting in further deterioration in Germany's growth dynamo industries.
And just so it is not left out, the ECB's rate cut apparently also is very Yen negative.
Sadly, this is what happens when one puts Atari 2600 in charge of the FX market.
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Brave new QE world we live in now. Another reason why I don't trade the news.
These interest rates are going to "at or near zero" for a LONG, LONG, LONG, time.
I don't believe that line, at all.
I think apology to the Atari is in order. I still have mine and its the shit. Not to be confused with our global bankster cunts, who are literally, dog shit (sorry, my canine friends)
agreed, Atari 2600 is no joke. a better comparison would have been the timex sinclair or that talking robot that plays 8 track tapes..
http://www.youtube.com/watch?v=WoQSTXNkcxw
.. Another reason why I don't trade.
Admittedly, you have to watch a lot of CNBC to understand how this complex stuff works.
@molecool
How the fuck do you trade anything? Technicals are fried just as badly. Only a BTFD/momo strategy has worked consistently these past 4 years (for those who played each dip correctly).
The answer is that you don't trade. The CB's want the market all to themselves. :)
@Peter K
I agree that the answer is not to trade; however, the lack of retail/mom-and-pop participation in this market is the only the only reason it hasn't crashed. The big players have backed themselves into a corner.
Market efficiency does not require that the market price be equal to true value at every point in time.
This EUR spike will not stick.
"Pya the Bank money soit can confiscate their deposits for them". Fixed it for you.
Makes perfect sense. Just like everything else in the new normal
I.E. Es ist Kaput!
Mommy, my central bank is broken again, and the other kids aren't playing fair with their central banks.
On the Holodeck, you can go through the paces of whatever simulation you like.
The computer has safety protocols in place, so that fantasy (a swinging holomatter sword) does not trump fact (your head).
Are the safety protocols on now ?
So Euro down...Dollar up....and the metals head lower priced in both?
Check mate.
Has been since 2008, it's just a matter of moving round the pieces on the board since then...
Very dismayed to see th USDJPY time lag ... oh, that's better.
And negative for gold and silver? More easy money and no rise in gold and silver? This bizarro world get more bizarro everyday.
new normal...you know, right is wrong, left is right, up is down, printing is good, spending is good,
And negative for gold and silver?
Gold and Silver paper i think
Overdriven positive feedback loops can have wild oscillations in any direction before they break.
This move had been known by some for weeks. Now is the time to fleece those who are just now hearing about it.
Gotta get 1600 one way or another, though in 15 minutes when the bonds traders actually get to work, things will get very interesting.
Watch the YEN for a drop too, this cannot be good for the efforts of the BoJ.
Dollar seems to be resilient so far, JPY not so much. Its a bad day to be long YEN.
So putting the cash in the bank truly has become money free risk
Treasury Direct looks better and better all the time if you have more than the 250K FDIC limit, or if you are unfortunate enough to be stuck in Euroland.
SPX futures green as grass.....algos translate it all into bullish and btfd.
The Euro is being supported very OVERTLY by B O J as I type this. The $ index is static, the Euro dipped and ripped and the $/Yen cross pair has jammed the Yen...again...We may be witnessing the evidence of a REAL currency war. If so, this will get VERY wild, because the U.S. is the ONLY force that can jam B O J relative to the Euro. ECB has no real tools for this battle.
How the German's will allow themselves to subsidize Japanese re-flation at their own expense is BEYOND all reason...??!!
@W T F II
Well said. This is how hedge fund and quant trading desks are blown up. They seize on a "can't lose" carry trade and ride the sails with the central bankers' wind at their backs...until economic deteriation is so great that the fundamentals matter again, resulting in equity selling which starts the gret carry unwind. It is coming. Tomorrow? Next month? I wouldn't be so bold as to say. But it is coming soon enough.
I am STILL giving the C Bs credit for being intelligent and staffed by smart people.
If this is so, then there is only one reasonable conclusion. THEY KNOW this is all unsustainable, that Euro banks, in particular, are insolvent, that the ECB does not possess tools or leeway to deal with it all and that the EuroZone is in abject Depression spilling over to the entire World's demand structure.
When I combine this with the growing power and dissatisfaction of the emerging economies with this Developed Market's mess, I can only conclude that we are in for a completely NEW PARADIGM, where there will be a new reserve currency through 'drawing rights' and they will pop this on us at the depths of the coming downturn.
When it all occurs is the ONLY question. I would venture to say sooner than later...??!!
USD Challenger Job Cuts (YoY) -6.0% 30.0%Because it's different this time...
Normally this is normal in the new normal.
Deep....Deeper....Deepest Depression....sinking lower every day. I am glad the "civil unrest" has been very linited so far. With 27% unemployment rate (or higher) in many parts of Europe (and the world), it's an 'unhealthy' situation.
RE:
I'm not.
At some point, the statists and the corportists need to learn their lesson.
Things won't change this time until the streets burn.
Because those in charge have NO interest in doing it, or listening to anybody who has any ideas on how to fix the problems we are in (mostly because those in charge are paid by the rentiers to keep shit the way it is).
The rentiers have too much skin in the game to just give up their positions. Legislation and laws are nothing more than vehicles of protectionism.
Plus, I need a break....and so does humanity. We all need a 2 month vacation from this daily battering of bullshit.
I'd rather gamble on a coin flip than be anted off.
When this powder keg blows it will be the equivalent of a supernova. The main question is what is a safe distance to enjoy the spectacle and munch some popcorn? Maybe if that Mars colony ever gets off the ground, its colonists will have the best seats.
I wonder when everyone will stop waiting for the powder keg blowing moment and look down and realize they are standing in quicksand.
So we have confirmation then: Newtons apple falls from his head to the tree.
Now that is just plain funny.
I needed the laugh, thanks
It makes perfect, think of a balance between return of money and return on money.
The rate cut contributed more to lessening the fear of return of money than the decrease resulting from return on money.
That didn't last long - Euro is back in the tank and the USD is back up.
More gongshow please.
the upspike was always the manipulation move before the main event.
Give us FX Swirlograms, GS! Need to see those currencies circling ever tighter and faster around the drain, so we can extrapolate, and jump off before we reach the Monetary Schwartschild Radius (Event Horizon). I'm sure GS knows when to jump off.
Alice in Wonderland Land, the new 'Normal': Up is Down and Down is Up