Bidless Euro Crashes To Level Not Seen Since March 2006

Tyler Durden's picture

Having closed the Friday session less than 1 pip above the hugely important 1.2000 level below which there lay many stops, following this weekend's news onslaught which seemed like a deja vu of the newsflow from the fall of 2011, where the main catalyst was the Reuters report that Germany is preparing to let Greece go once and for all (with the subsequent attempts at retraction barely noticed), or maybe just because someone wanted to price in a little more of the more than fully priced in by now ECB QE - which very well may not happen - the moment the EURUSD opened for trading it took out not only the critical 1.2000 stops, but within milliseconds the Euro found itself bidless and crashed to a low of 1.1864, promptly taking out the lows set in May 2010 when the first Greek bailout took place, and tumbled to a level not seen since March of 2006!

 

Following the initial collapse the Euro did stage a modest comeback, but even the dead cat bounce appears to be fading and at this rate Mario Draghi will have no choice but to reprise his July 2012 "whatever it takes" melodrama or else any bank, pension fund or institution that is still long the EUR may not make it past tomorrow's margin calls.

Paradoxically, in the newer-normal, EUR weakness which implicitly means USD strenght, the plunge in the Euro means another spike in the USDJPY to which all the E-mini algos are correlating, so in the off chance that the EUR collapses to parity, sending the Yen crashing to Albert Edwards' 135 level, may be just what the market needed to finally hit Goldman's 2015 year end target of 2200 a year or so early.

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jubber's picture

Austrain Market up 75 ?

hedgeless_horseman's picture

 

 

Oceania has always been at war with Eurasia.

knukles's picture

A currency without a country

Publicus's picture

Gonna need Ruble to buy gas. Euro not accepted.

The dustbin of history will soon welcome the Euro.

knukles's picture

It'll all be OK when they start shivering and decide to be come one with the Eurasia/Oceania/EU/China/New Hebrides, Monaco, Inuit and Métis Nation and Pau Pau New Guinea New World Order.
Shit, they'll even be able to issue their own postage stamps!  Imagine That!

kliguy38's picture

doomer.....(sarc off)

kaiserhoff's picture

Stops are for those who are maff challenged.

cifo's picture

Not really bidless if it traded at 1.18.

kaiserhoff's picture

Thank you, kind sir, for pointing that out.

Traders are an endangered species around here.

stormsailor's picture

tru dat.  it would have read "0" if it were bid-less.

medium giraffe's picture

Stops are for pussies.  Real men use margin calls....

Ghordius's picture

"It'll all be OK when they start shivering..." ah, the old refrain about Russia cutting gas deliveries to the EU that we heard the whole summer

well, it's January, and we are having a cold winter. and Russia is courting the EU countries with nice words of an Eurasian trade alliance

Ghordius's picture

oh, and another rant for you, who like to point at the EU as a source of "world government" aspirations straight out of some US Neo-Con propaganda website:

get your Nineteen_Eighty-Four references straight

in George Orwell's dystopian novel written in 1948, there are three blocks: Eurasia, Eastasia and Oceania. see here the map: http://en.wikipedia.org/wiki/Nations_of_Nineteen_Eighty-Four

Eurasia would be the EU and Russia. Eastasia would be mostly China with Taiwan and Japan. and Oceania would be centered on the AngloSphere without India, but with parts of Africa and the whole of the Americas. with the UK as "Airstrip One"

ParkAveFlasher's picture

"A currency without a country"...

 

...gold, bitchez!

Bossman1967's picture

these people have no ethics no boundaries how many countries will allow the U.S. to do this and what about the people of those we are hurting?

Stoploss's picture

Somebody is definitely going to shit the bed this week.

Who's it gonna be?

kaiserhoff's picture

Their name is Legion.

Jesus told me so.

StormShadow's picture

The SNB will be shitting for sure

Greenskeeper_Carl's picture

Is that your way of saying you think it's gonna be raining bankers somewhere?

F22's picture

Oceania has always been at war with Eastasia.....

ZH Snob's picture

bidless, ha!  we can only pray this happens to all fiat currency, but the desperate thirst for liquidity will insure its value...for now.

ukspreads's picture

Smoke / Mirrors / Bullshit / and anything else I may have missed
Oh yeah, Fraud ! 

sun tzu's picture

skullduggery, scienter, subterfuge

Manthong's picture

Chicanery, duplicity, villainy

ebworthen's picture

Uh-Oh, Draghi might actually fire the QE bazooka rather than just wave it around.

Japan did it, Europe's turn. 

Then the FED will follow when their 0.25% rate raise crashes U.S. markets.

gatorengineer's picture

China is up before the Greek election, maybe as soon as tonight....  They know not to let down get any momentum.

HardlyZero's picture

Virtual QE bazooka...fixed.

How could Draghi build anything QE without a Federation ?

Monetary union is not really enough of a mandate to permit a EU QE.

Ghordius's picture

you mean he wants to re-expand the ECB balance sheet of that very same one trillion which was what the ECB balance sheet shrunk, in the last years

in short, to go back to the levels of 2012. a small detail, I'm sure. insignificant, and so easily neglected /s

Haus-Targaryen's picture

People not being able to comprehend the ECB's balance sheet contraction does not a good currency union make. 

Ghordius's picture

you mean people not used to even think that a central bank's balance sheet can contract... no, you have lost me, there

fact is that most of the ZH commentariat has not realized that the ECB's balance sheet has contracted by one cool trillion

fact is that europeans have a history of many national banks which did not follow the FED's modus operandi since 1913

fact is that the whole concept of flexible currency and flexible response to monetary shocks is neither needed or even known, inside the dollarzone (the sterlingzone is a special case)

the Finnish National Bank has a history of flexible responses. so the Danish one, so the Swedish one, so the German one, so the French one, so the Italian one, so the Greek one, so the Dutch one, so the Portuguese one, so the Austrian one, so the Hungarian one. only from memory, I could count dozen of times where all those national banks had to ramp up their balance sheets and then shrunk them

with or without using/misusing their national banking systems. or like the SNB is doing, at the moment

what is exactly your point? that Americans not understanding european national banking history does not make a good currency union? I hardly think this is what you meant

what the dollar is doing at the moment is a monetary shock of the highest magnitude

first the FED printed like there is no tomorrow, and then it stopped. first a flood, and now a retraction of global liquidity

the dollar, the American's currency and the world's problem, remember?

Ghordius's picture

Haus, remember that even the US has a currency union, with a dozen Federal Reserve Banks

what is a good currency union? well, it depends on what you want, doesn't it?

personally, I prefer one with one task only: price stability

and price stability inside the eurozone needs of course an eye on what global conditions are, particularly what the global reserve currency is doing. which then again needs flexible responses, something the global reserve currency management does not need

whatever you have to complain about the EUR, can you, in all earnest, point to a price instability inside the eurozone? the same eurozone which is still a net exporter, it's members are slowly converging on a common policy of balanced budgets, and which might soon be called the "saving glut" net exporter of "capital"?

sure, the most orthodox Austrian School proponents would prefer to have an inflexible gold currency. but that's not in the eurozone's power to give or take

Haus-Targaryen's picture

Ghordo - 

 

I am not arguing the virtues of Austrian economics -- I am simply saying from an economic perspective, the EMZ is not a good currency union as it has coupled together 2 dramatically different monetary cultures.  

You say its good because bigger is better, but fail to answer why not include Egypt, Morocco and Libya in the currency union then.  

I think you make me out to be one of these tin-foil hat wearing looney toones on here.

I am a HUGE FUN of the Neuro idea.  I do not want everyone going back to their own currencies.  

So going forward, you cling to the idiom "Bigger is Better" and I'll cling to the "A chain is as strong as its weakest link" idiom, and we'll see who prevails.  

You have politicals and the status-quo on your side.  These two things are much more powerful than many, if not all of us on ZH estimate.  

I have history and economics on my side.  

I think you will wrack up a series of "wins" in this Grand Chessboard, but eventually it is my side that will get the "Checkmate."  

TeethVillage88s's picture

Low Money Velocity in EU, Low levels of Manufacturing Jobs, Low Investment in Capital Equipment, Capital Expansion... Where does the Capital go in the EU? Maybe Capital is Hoarded, is Stagnant.

Commodities are Traded & Speculated on in addition to being subject to mother nature, Energy Costs, Sanctions, Scarcity of Water, Labor Costs...

Inflation in the EU? Executive Compensation must be going up. Military Spending probably inches up each year by 3% Right? Government Spending on Buildings, Overhead, Employee Compensation, Infrastructure must go up by 3%, but probably there are many new EU Buildings to pay off so say 5% Increase... Inflation must be True in the EU if we look for it.

OR maybe I need some Correction.

Anyway the EU, UK & USA are similar in that Money Velocity is Low & there is little Investment & Little Wage Increases... so Why would there be a big issue with Inflation. Seems like a silly Idea to worry about Inflation in the USA or UK or EU... when there is little Investment.

"A major international organization, the Organization for Economic Cooperation and Development (OECD), is calling on Europe to relax its fiscal rules and for governments to spend more money, saying Europe's sluggishness is dragging down the global economy."

http://www.dailysabah.com/economy/2014/11/25/eu-economy-becoming-a-burde...

Haus-Targaryen's picture

When did I ever say anything about inflation?  It has more to do with "domestic" law and certain nations being more competative than other nations.  

Ghordius's picture

your premise is, in my opinion, simply wrong. hell, Greece had, in ancient times, radically and dramatically different monetary "cultures". from the gold coins in Milet and Ephesos and of course Gordias to the silver coins of Athens to the iron coins of Sparta

there is no such thing as a monetary culture in the sense you are using - which is perhaps a radical misunderstanding of what makes a culture, or even a cultural war

there is something like a political culture. with degrees of corruption and with degrees of overspending

the driver is always the state budget. overspending leads to deficits which then have, eventually, to be monetized, particularly if there is no positive trade balance

so no, I don't think you have history and economics on your "side", and I'm puzzled that you don't want everyone going back to their old national currencies. but again, lots of things I read on ZH leave me puzzled

neither Egypt nor Morocco nor Lybia are inside the trade union. one of the many pre-requisites for membership in the monetary union is membership in the trade union, aka EU (though this did not prevent Montenegro from simply unilaterally adopt the EUR as official currency, or most of the other small european currencies to peg or floor to the EUR, as in the case of the CHF)

"I think you make me out to be one of these tin-foil hat wearing looney toones on here" why?

I don't like your "let's have armageddon/apocalypse asap!" comments. I don't like your support for "Allianz für Deutschland". I don't like your "cultural war" against Latins, and I don't like your conflation of Mexicans with our European Latin countries. And I don't like your support for this (imo whacky) idea of a "neuro"

Those are (cultural and) political preferences. I defend your right to have those preferences, here in Europe. But as you yourself point out, they have currently little political traction. We still are an alliance of republics with democratic principles, with a tradition of multi-party politics. If you like your point, you have to convince majorities. My side did, and is still selling the concept of balanced budgets

the biggest coupling of two completely and dramatically different "monetary cultures" was when the German BundesBank converted Ost-Marks to D-Marks, and this 1:1

Haus-Targaryen's picture

So the driver is the state budget, eh?  

What/who determines the state budget?  Why do certain Latin nations in the EMZ habitually run deficits, and have historically printed their way out of it while the northern nations have not done this?  Is this because the Northern Nations have better bankers?  Probaby not.  If you refuse to admit that culture affects the way groups of people spend money on a macro-level -- you have drunk your own cool aide and are daftly living in fantasyland (or Rainbow Land as SuddenDebt called it).  But lets run with your political culture idea eh?  

There is a country.  Lets call it "Land A" which is overrun with corruption.  You want to open a business, you've gotta bribe 35 people.  You get pulled over for speeding, you can fight it and bribe 2 or 3 people, or just bribe the cop.  You pay taxes -- you can either catch a tax break, and bribe the tax guy, or get audited naked by ISIS and refuse to pay the bribes. This rampant corruption causes people to do underrepot their taxes on a massive scale so this corrupt middle man doesn't skim so much off the top.  

in Land B there is little to no corruption.  If you fail to pay your taxes, and your neighbor finds out about it -- he will turn you in without thinking twice, and the TP has to pay a ton in fines and penalties.  If you try to bribe a police officer, it is a crime and you are incarcarated.  Those who are corrupt are discoved quite quickly via the non-corrupt tax scheme in Land B -- and are thus crucified upside down in fines and penalties.  There is an incentive to report your taxes as accurately as possible, becase no one wants to pay too much, but no one wants to pay the fees and penalties.  

Due in part to this corruption, Land A is unable to compete with Land B.  Land A is poor, and Land B is wealthy.

I look at the above example -- and say these two nations shouldn't share a currency.  You look at these two nations and say they should.  

See Ghordo -- at the end of the day, you talk about it as a "culture war" against Latins that I propose.  This isn't the case at all.  What I am saying is that the Latin countries in the EMZ are different in the ways they spend and save than the non-Latin countries are.  Due to these differences, they should not share a currency.  This is all I am saying, and will support any political party, or ideology that supports this conclusion.  Why?  Because its the truth.  If that is the AfD creating political chaos in Germany -- fine.  If its economic armageddon that does this.  Fine.  If its a NEURO that does this (my personal favorite idea) -- fine.  

You (I have no doubt will talk about everything else under the sun except the following -- its your way of avoiding topics at hand) likely intellectually realize these differences in monetary culture (meaning a social and political environment and history which leads large groups of socially and politically similar people to spend and save money and other assets similarly) between the North and the South.  You also likely realise that these differences have created a union where benefits and detriments of the union are mutually exclusive.  You are a smart guy and read the same stuff we read.  Thus, my only conclsion for your thesis' on here is "Rubbish.  These differences don't matter at all.  The Union can overcome," "Europeans are the Same in All Things" etc., etc., or some other form of similar nonsense.  

And yes, even though East Germany was sold off into Communisim, along with Poland (our Ally in WWII) and the former East-Prussia (Silesian, Ober Silesian, Ost-Preußen etc., etc.,) by that coward Truman -- East Germany since reunification has a more productive workforce (State GDP/population) than almost all of Spain (and if Catalonia goes all of Spain), almost all of Italy (if Süd Tirol goes than all Italy has left is Lombardi and Venice), all of Portugal, about half of France, all of Greece, 35% of Belgium and about 1/3rd of Ireland.   I would imagine that in 25 years -- the East Germans will be almost as competative as the former West Germans were (espeically as their welfare state shrinks due to a population problem) -- while the above places are still borderline 2nd/1st world shitholes.  (When was the last time you went to Rome) 

Lastly -- your side advocates for balanced budgets, while at the same time bitching and moaning about austerity (aka balanced budgets).  Pick one Ghordo.  You cannot have it both ways.  

P.S. -- If Egypt met all the goals and objectives necessary to use the EUR -- would you supports its ascention into the EUR and the EU?  What about Turkey? Where do you draw the line?  If its just a Geographic line -- you are -- much less intelligent than I originally thought you were.  If its a Cultural Line, then who defines what the tolerance differences are or should be?  

Ghordius's picture

you keep peppering my statements with external points I have never brought forward. which sometimes leads me then to regret I was starting to chat with you

"Lastly -- your side advocates for balanced budgets, while at the same time bitching and moaning about austerity (aka balanced budgets).  Pick one Ghordo.  You cannot have it both ways."

no, you can't have both ways, and me and my side never moaned against austerity, only for balanced budgets

"If Egypt met all the goals and objectives necessary to use the EUR -- would you supports its ascention into the EUR and the EU?  What about Turkey? Where do you draw the line?"

read again, the line is drawn: a country can't join the monetary alliance if it isn't already a member of the trade alliance

further, if a country does balance it's budget... then it does balance it's budget

you ask me to take you seriously. please start by reading what I'm writing without peppering it with assumptions. I don't care for your "thing" against Latins, I see it mostly as something you took with you from America. And historically, your concept is not sound, and you can find instances of overspending in every and each country of Europe. Name me one northern european country that never overspent. (as a counterpoint, the Mexican central bank is currently the "darling pupil in class" of the IMF. How much did Mexico overspend per person or per GDP... compared to the US?)

It does not matter. It's a club of balanced budgets inside a club of trading partners. That simple. If you convince the others, you may join the trading alliance. Then, if you convince the others, you may join the monetary alliance... after you qualify. And the qualification thing is of course more important then ever, since we have seen how the Squid can "help" to cook the books. The "cultural line" is not drawn a priori, it's part of the acceptance process... of the members. Germany, for example, draws the line at Turkey

Rome is a big place. I often go there, but perhaps we hang out at different places?

Haus-Targaryen's picture

Sigh.  

Again, you dodge the fact that there are monetary difference between North and South.  Until you can recognize this as the fact that is it -- there really isn't a point anymore.  

 

GoldSilverBitcoinBug's picture

Price stability lulz.

Yes, very stable if you exclude energy and food in your CPI and add computers and OLED TV (very useful to live isn't it ?)

Wait that oil goes up even a little and how the price stability will work.

Wait for the parity with the dollar it will be fun to watch.

Sorry I stick with"Austrian Gold Currency" the only true one since the dawn of the human civilization, nothing more, nothing less.

falak pema's picture

sorry but its outdated as a tool if not as a rule. 

The rule is never create more money than you can re-imburse to creditors. So it implies balanced budgets and trade balances for those who create money supply (governments and banks).

Whether that money is physical gold or paper IOUs is not that relevant. The monetary thread since the Middle Ages has proven that.

What is more important is that the ETHICS of the money changers stays valid. And THAT is much more complex as it involves the POWER meme, and its shenanigans in name of "for us or against us" type mantra. Nothing to do with ETHICS, more to do with irrational, hubristic Darwinian power jerks.

In the coming age we will all be moving to monetary tools of electronic type; of which bitcoin is a failed precurser; but points the way. 

What will always bug humanity is the ethics of human nature. And that has nothing to do with the tool : the money thread; whether it be debased gold coin (yes, that was the trick then), debased fiat, or scammed electronic money. 

A tool is but a tool, its the MAN who is a fool or a wise investor.

If he believes in moral hazard and ethics of "spread out the wealth like manure and it will harvest the whole field. Don't stash it in caves or tax havens as it will corrupt the sons of the rich." 

Amen to the Shamans of libertarian mumbo jumbo and gold bugging contango. 

TeethVillage88s's picture

Yes, Ethos, Logos, & Pathos.

I'm with you till the last 3 Sentences. But I'm not that Erudite.

Ghordius's picture

"...very stable if you exclude energy and food in your CPI and... "

you are barking up the wrong tree. in the eurozone, all national CPIs include food and energy

plenty of ZH articles about how lower energy prices made those CPIs go down, and how megabanks took up this to shout for QE

your gold currency in your currency zone? where is that? we can't change the global reserve currency. lead by example, will you? perhaps we'll follow, then

and what would happen if the Dollar would be at parity with the EUR? the end of the eurozone? seriously? how so?

GoldSilverBitcoinBug's picture

So what's your point ? Debasing and inflation is good ?

Hint: it's not, and your oil is just manipulated by the Arabs. Again wait oil going up even little and we will bleed like a Japanese.

Just imagine a scenario when EURUSD = 1 and Oil is 80 USD...

As a French consumer I haven't saw the food price going down significantly...

Ghordius's picture

what is your point? your comment was wrong: eurozone CPIs do include food and energy

GoldSilverBitcoinBug's picture

They manipulate the weight of energy/food (adding more weight to deflationary sector and commodities) in CPI to make it deflationary to try to justify QE and monetizing so your comment was irrelevant.

nmewn's picture

If I were an unethical man, I could make a killing.

But then I'd have to live with myself.

NoDebt's picture

Oh, go on.  Treat yourself.  Everybody needs a bad habit or two.