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EURUSD Plunge Continues: "It's Not All About Greece... Not Even Close"
Crude oil prices are tumbling as the USDollar pushes on to new highs driven by the continued stretch of renewed weakness in the Euro. As Bloomberg's Richard Breslow notes, however, "it’s not all about Greece. Not even close."
As we think about the relative cyclical states of economies and where they need to be priced in the markets, Europe does not look to be in a very good place. And this is not a bad thing.
In the post-Bretton Woods world, it is obvious that the euro downtrend is ultimately the life line needed to both save it and usher in the new world of global financing that reflects the rebalancing needed to fund world trade and global economic resurgence
In the last year, the EUR has been in an unmistakable downtrend versus the bellwether currencies it needs to partner with to fund global economic growth, as well as against the Chinese renminbi, which can no longer be ignored by labeling it an emerging currency. So let’s take a look at the EUR versus the SDR basket and CNY...
EUR/USD hit a one year high on July 1, 2014 at 1.3700. Since then, it has respected a very clear trend line through May 15 with no breaches. When it threatened that trend line, ECB Council member Benoit Coeure rushed to let the market know that the ECB was poised to boost its asset purchases. After a one-month peak above the very telling 55-DMA, the EUR yesterday broke back below this level. There are now loads of resistance points at 1.1050, 1.1205 and 1.1470.
Yesterday’s U.S. economic data, in this data-dependent world, lent impetus to the latest leg lower
EUR/GBP had its trailing one-year high in May 2014 and looks set to not only make a new one-year low, but a five-year low. On the monthly charts, it looks even worse. Through 0.7000 (current level ~0.7080), it revisits pre-financial crisis levels
Versus the appropriately sickly JPY, the EUR (~134.50) is ~15 cents below the one-year high, 3 cents below the one-year average price and is flirting with the low end of the 100-DMA/200-DMA range that has defined this month’s trading. Perhaps more importantly it remains below the monthly support levels
And now, back to the SDR issue, the EUR looks horrendous versus the CNY and broke back yesterday below its 55-DMA.
The trend is so obvious that in retrospect you would have to kick yourself not to take the fundamental story, look at a chart and sell, sell, sell. The latest rally in the cross was so perfectly defined as to be text book material. Through 6.500 (current level ~6.7600) there is no support.
Repetition alert: To save the EUR it has to be devalued
All this came to mind as I was reading stories yesterday about this past weekend’s elections in Poland and Spain, Italian PM Renzi’s conclusions that EU austerity insistence has been a political disaster, and how Merkel and Hollande were banding together to rebuff Cameron’s renegotiation efforts
Rajoy’s PP was pummeled because he has been so intent on portraying himself as a core Europe advocate that he utterly forgot who he was elected to serve. He will be fortunate to survive until the national elections
The EU is fighting battles whose ships sailed a long time ago. If it does indeed represent all of Europe, policy makers have to bury a lot of hatchets they don’t seem close to dealing with
As Europe struggles with reform of all kinds (and Mario Draghi can’t save them on his own), it is fascinating to compare their efforts with what is going on in China
China has embarked on a massive campaign to curtail a shadow economy rooted in corruption and useless projects. As a result, the economy has suffered -- in the short-run. They know this. They are openly planning additional stimulus, even if they have to do so by sucking in hot money. The markets are apoplectic that China is not providing instant gratification. What they are doing is getting their house in order, and they will emerge that much more ascendant. By contrast in Europe, the prescription for political reform has been well-defined for years, yet they continue to prove incapable of moving toward a sensible fiscal and monetary union
Those who chase the Shanghai Composite may be doing the greater good but at their own expense. Aside from that, a new SDR currency is baked in the cake
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Don't bother trying to kick this football. The USD has had a nice retrace to where it started dumping. They are not going to let the Euro go through the floor, anymore than they were going to take the USD directly down. No tail events allowed. But it is time for the USD to go back down. It isn't a market. It is completely rigged by cooperating central banks. The USD has been way too strong. They are going to undo that.
Spot on. Unless some exogenous event causes the circle jerk of central banks to lose control, this controlled shit will continue.
There is nothing but a central bank controlled world now. Nothing.
What if the central banks flip hostile, or lose influence over the actors in the market schema? What if the plotters lost trust with one another, what if it's every banker for himself?
And then you woke up.
Really? What do you think broke open the bloat in '08...whales hunting whales. Lehman got beached and exploded.
But if we are talking central banks, western central banks already have an enemy in Russia and China. Would they attack each other and leave a large hole for China and Russia to fill?
Because the CB are funtionaries. They are owned and operated. I am speaking of the owners and operators, the question is, are they monolithic or not? Which one of us is asleep?
Creditors will soon come calling..... (From the east)
the CBs may,one day go Reservoir Dogs on each other but not yet. there are still a lot of "little whales" whom are not part of the "ownership" club that can be consumed.
And the explosion was aided & abetted by none other than Henry "Ahab" Paulson aboard the Goldman Sachs' Pequod...(as I am certain that Hank's GS stock options did not play any material role in Lehman's demise & Goldman's magical transformation into bank that September 2008 weekend)
Translation: We have to kill it in order to save it.
Amazing watching a global round robin devaluation scheme ....
Ever so reminiscent of the UK and Continental Europe during the '60's.
"Hey! Quit manipulating your currency!" As in pots and black kettles.
This is the crux of the problem........the market gets to choose which currency is strong/weak not the FEDs and therein lies the issue.
What you are seeing was the fall of the Euro and a dead cat bounce so you'd better get used to a much stronger dollar soon again especially if the US is forced to raise interest rates.
So you saw tomorrows annoucenment of "QE with a twisting shaken not stirred in the half pike missionary position"?
The US is in far worse shape than Greece, but we can still print money.
So far, so good.
But our women look better!
As a kid I drove around just looking at all the beautiful American women. Today, driving around is a bore,,, the women are fat and ohhh so ugly and the men not far behind. It is really bad.
I am starting to wonder what exactly all of the world leaders are talking about in all these meetings. We are told its about Greece. I guess when there is a 'crisis', that is the only headline. If there were no crisis, would anyone be asking about the leaders other plans for the world? They meet for days on end, how many hours can you talk about Greece? Maybe an hour or two? What else is on the agenda? and why isn't anyone asking about that?
Zip
Meetings are never about what they tell you they are about. I would say the the military build up inside the U.S.S.A should give you a pretty good insight into what their meetings are about. But hey, what do I know? I'm just a tinfoil hat wearing conspiracy theorist.
actually before the military buildup inside the USSA you were a tinfoil hat wearing conspiracy theorist. now, in addition to the aforementioned title, you are: a radical right wing constitutionalist/terrorist who i am assuming is also a gun nut/molon labe/prepper type who uses precious metals to do underhanded, shady, and illegal things.
You make "radical right wing" sound good.
So we'll all be rooting for you to bag Fedcoats by the score!
Meeting are no different than meeting in your company, meetings about meetings and never anyone clearly responsible for the next action item. The bigger the org the more innefficient, and gov is the biggest company of them all.
We give them too much credit. It is more of simple incompetence than planned deceits
But the end result is the same. We see it, they are only just beginning.
what matters is what they decide in DC ... others are just puppets
@ Z B Pants
The wolf spends more time eyeing the sheep than it does to kill it.
JUST IN
Gartman euro fall nothing to do with greece ...
Someone figured out that Grexit == PIS default?
imf said that cny is no longer undervalued
So French wines will be cheaper for the Chinese to buy?
The World is saved, I'm sure.
yeah, sure
it's not the EUR going down...only , it's King Dollar going up versus... everything
remember all the ZH articles about all those countries where everything went up while the FED was printing? well, here you have the receding tide
and this is going to hurt a lot... at the fringes of the dollarzone
but that's the thing, eh? the bigger a currency zone, the more difficult it is at the center of it to understand the problems of the frontiers
this counts for poor Greece, far away from Frankfurt, and this counts doubly for some 70 countries that are going to feel their problems with the Mighty Dollar
@ Ghordius
and this counts doubly for some 70 countries that are going to feel their problems with the Mighty Dollar
I hope you are including the USA in those 70 countries.
The fed will increase rates to try and stem the flow to the $.............like putting petrol on the fire to put it out.
USA economy will tank and has already started to tank
JMHO
The US is already tanking, but it is a big ship.
This is sad to watch, much less experience.
And this is where the fracturing will take place - not at the core of the central bank cabral, but at the edges where the walls are not so strong and where the alliances are more easily discarded.
Just like every other time, human ebbs and flows.
too many borrowers in USD have no money to return ?
The U.S. Dollar Index has had a very positive last couple of weeks causing some to speculate that its recent pull back might be over and its juggernaut climb is about to resume. While that option remains a possibility, the probability seems unlikely.
http://www.globaldeflationnews.com/u-s-dollar-indexelliott-wave-update-f...
welcome to Great Depression 2.0....where currency war and zero interest lead us to economic devistation! I might live to see QE MAXIMUS ....FED Printing $1 Trillion USD a month....
Long UUP calls!!!!!!! USD will continue its surge for a few more months!!
USD headed to 120 and higher. Historic move in USD is the black swann we have known is comming.....
Is the dollar up on "exit," or "strength?"
Liberty is a demand. Tyranny is submission.
No mention of the Yen's recent breakdown of long-term support?
I perceive it as being similar to when the Euro broke below $1.19. We could see marked weakness in the Yen in coming months, putting pressure on both the USD and the Yuan (certainly the latter).
http://finviz.com/futures_charts.ashx?t=6J&p=d1
Scrutinizer