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Meanwhile, The Euro...

Tyler Durden's picture




 

It would appear that 1.39 EURUSD is the line in the sand for Mario Draghi. As pressures build on European competitiveness, Draghi appears to have finally got sick of China buying EURs to diversify its FX reserves away from USDs. This time "whatever it takes" is to drag the EUR lower - on the back of suggestions that OMT 2.0 (new measures - double the effectiveness and just as non-existent) and guarding against deflation (not worried about inflation). The jawbone is working for now as EUR breaks down through 1.39.

China has been diversifying aggressively away from the US Dollar:

Via Bloomberg

 

Add China pushing the yuan lower and diversifying reserves away from dollar assets to the drivers behind the euro defying forecasts and rallying to a two-year high versus the U.S. currency, according to BNP Paribas SA.

 

 

The upper panel shows the 18-nation euro reaching the strongest level since October 2011 and the six-month average of changes in China’s foreign reserves touching the highest since June 2011, according to data compiled by Bloomberg. The lower panel shows the yuan, after strengthening the past four years to an all-time high, slumped by the most on record last month amid speculation the People’s Bank of China will allow greater volatility.

 

"China’s central bank is widely believed to have intervened heavily in February and this means markets will anticipate a period of the dollar selling versus the euro and other reserve currencies as these reserves are diversified,"

And so Draghi finally reached "Whatever it takes 2.0"...

  • *DRAGHI: EURO GAINS 'INCREASINGLY RELEVANT' TO PRICE STABILITY
  • ECB'S DRAGHI SAYS REAL INTEREST RATE SPREAD BETWEEN EURO ZONE AND REST OF WORLD WILL PROBABLY FALL, PUTTING DOWNWARD PRESSURE ON EXCHANGE RATE
  • DRAGHI - ECB HAS BEEN PREPARING ADDITIONAL NON-STANDARD MEASURES TO GUARD AGAINST DEFLATION, STANDS READY TO TAKE FURTHER DECISIVE ACTION IF NEEDED
  • *DRAGHI: TOO-LOW INFLATION NOW 'MORE RELEVANT' THAN TOO-HIGH

 

 

It would seem, given previous levels and actions, that Draghi has given the market a bogey of around 1.45 for the next round of QE

 

This comes as the "Deflation Club" in Europe doubles to 4 members:

Signs of deflation strengthened on the Eurozone periphery Wednesday, with four countries now registering annual declines in consumer prices.

 

Data around the edges of the single currency area showed that consumer prices fell by 0.1% in February in both Portugal and Slovakia compared with a year ago. The two countries join Greece and Cyprus, where price declines are already running at an annual pace of more than 1.0%.

Charts: Bloomberg

 

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Thu, 03/13/2014 - 14:01 | 4543973 Squishi
Squishi's picture

and Russia Bans Kasparov

Thu, 03/13/2014 - 14:17 | 4544064 Thought Processor
Thought Processor's picture

 

 

Remember, when they want the market to go down it will go down.

 

 

Thu, 03/13/2014 - 15:46 | 4544562 Isotope
Isotope's picture

Can somebody comment on what effect the higher Euro has on the Swiss. I assume that they are still trying to peg the CHF to the Euro.

Thu, 03/13/2014 - 18:45 | 4545458 Luckhasit
Luckhasit's picture

We call that, Full Retard here on ZH.

 

Thu, 03/13/2014 - 14:02 | 4543979 Soul Glow
Soul Glow's picture

Print baby print!

Thu, 03/13/2014 - 15:47 | 4544512 trilliontroll
Thu, 03/13/2014 - 18:46 | 4545463 Luckhasit
Luckhasit's picture

What happens when you run out of ink?

Thu, 03/13/2014 - 14:11 | 4544015 maskone909
maskone909's picture

holy shit thats a sizable move.  looks to be a currency driven market today. 

 

Thu, 03/13/2014 - 14:16 | 4544058 DeadFred
DeadFred's picture

The Euro had risen above a multiyear trend line yesterday and has dropped back to the trend line. Is it going back down or is this the kissing the old resistance to confirm the breakthrough. By Friday PM we'll know. The dollar is toast if the breakthrough is confirmed.

Thu, 03/13/2014 - 15:26 | 4544450 Big Brother
Big Brother's picture

Where to go long?  1.3800/50?  Wait for a retrace, bounce, hammer-candle?  The SSI shows about 8 to 1 retail short EUR to Dollars (and retail is wrong about 75% of the time).  I will put my money where my mouth is. 

Thu, 03/13/2014 - 14:24 | 4544104 Soul Glow
Soul Glow's picture

Is it ironic that gold had a massive upside move yesterday, pinning pressure on the whole fiat structure of finance, sending markets of all sorts reeling today?

I think not.  Gold is what moves the markets.

Thu, 03/13/2014 - 14:10 | 4544024 BrigstockBoy
BrigstockBoy's picture

It's OMT...oh, my tush...for Mario as everyone takes their turn fucking the EU.

Thu, 03/13/2014 - 14:13 | 4544039 pods
pods's picture

Everyone?

Even Bang Dae Ho?

pods

Thu, 03/13/2014 - 14:16 | 4544057 Dr. Engali
Dr. Engali's picture

I don't care how much of our toilet paper you buy, we will keep printing moar. WTF is keeping any fiat alive at this point?

Thu, 03/13/2014 - 14:24 | 4544099 disabledvet
disabledvet's picture

see below and "China picked a bad time to be friends with Russia" apparently. Even more so...Russia picked a bad time to be enemies of all of Europe" and go full on 4th Reich here.

The war now appears inevitable...I find it interesting that China will finance the counter offensive.

Thu, 03/13/2014 - 16:05 | 4544664 NoDebt
NoDebt's picture

"WTF is keeping any fiat alive at this point?"

Any significantly-sized piles of it being held in a small, controlled group of hands.

Thu, 03/13/2014 - 18:48 | 4545468 Luckhasit
Luckhasit's picture

Tanks. Lots of tanks with the attached ground troops following the scounting by special forces.

Thu, 03/13/2014 - 14:17 | 4544068 Ulterior
Ulterior's picture

this can take gold down, if you have noticed the correlation... hope it will not

Thu, 03/13/2014 - 14:22 | 4544093 Spungo
Spungo's picture

Holy shit it dropped by 1 PENNY. Everybody panic right now.

Thu, 03/13/2014 - 14:25 | 4544109 kellycriterion
kellycriterion's picture

Travel to developed countries, natural competitors with the US, and you will notice that prices are higher.

Travel to poorer countries, countries the US buys commodities from or sells products to or who are in the same economic niche, and the dollar commands a premium.

This is known as a clue. Who is the real winner in the currency manipulation games?

Thu, 03/13/2014 - 14:31 | 4544144 kellycriterion
kellycriterion's picture

Travel to developed countries, natural competitors with the US, and you will notice that prices are higher.

Travel to poorer countries, countries the US buys commodities from or sells products to or who are in the same economic niche, and the dollar commands a premium.

This is known as a clue. Who is the real winner in the currency manipulation games?

Thu, 03/13/2014 - 14:38 | 4544191 orangegeek
orangegeek's picture

euro is closing in on a top - we had our upside and a big reversal today

 

  http://bullandbearmash.com/chart/euro-daily-closes-channel-resistance-te...

 

USD is close to a bottom

 

not a good move to buy euros for China - time will tell

Thu, 03/13/2014 - 14:41 | 4544208 markelshark
markelshark's picture

pfffftttt. no indication this is ECB induced. ZH loves to show these 1 minute charts where every move looks huge but take a step back and gain some perspective:

http://piphut.com/pro/dailycharts/long-term/EURUSD031314.gif

 

A really EUR tanking.... *sarcasm*

Thu, 03/13/2014 - 15:03 | 4544291 medium giraffe
medium giraffe's picture

Agree, it's a bit daft.  80 ish pips vs the full fall by £/$ from '08, 6000 pips or so.  Markets are dead too, things just get pushed around according to who got short where, a bit of news is always a convenient cover story and that new high made a nice lure.

Thu, 03/13/2014 - 18:46 | 4545465 Exponere Mendaces
Exponere Mendaces's picture

@markelshark

Yeah, 100 pips is something, but you can get that on a bank intervention or some crap news. Not really a super-rare event. I'd pay attention if the Euro was at parity or lower, lol. Its all a damn shell game in Forex anyway.

Thu, 03/13/2014 - 15:11 | 4544379 Caracalla
Caracalla's picture

WTF Kevin Henry?  What are you, asleep?  We are back on the daily lows and headed lower! 

Thu, 03/13/2014 - 15:53 | 4544605 JuliaS
JuliaS's picture

The anti-Russia sanctions must be kicking in early.

Thu, 03/13/2014 - 16:21 | 4544730 Euro Monster
Euro Monster's picture

"ECB HAS BEEN PREPARING ADDITIONAL NON-STANDARD MEASURES TO GUARD AGAINST DEFLATION" - Uh oh!

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