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EURUSD Quick Recovery From Opening Gap Down Even Though China Refutes Again It Will Bail Out Europe

Tyler Durden's picture


EURUSD opened down 80pips, to below Friday's lows, but has somewhat rapidly recovered those losses shifting into the green now in very early (and thin) trading. We assume this means the market has still not processed the latest news from China, which officially refutes, for the third time, rumors of an imminent Chinese bailout. From Bloomberg: "It’s “too early” to determine how emerging economies can further help the euro area overcome its sovereign debt crisis because reforms are still under way, China’s Central Bank Governor Zhou Xiaochuan said. “We need to first see if euro-zone countries can implement their July 21 decision,” Zhou told reporters at the International Monetary Fund in Washington on Sept. 24, referring to a pledge by European leaders to expand the powers of a regional rescue fund. He doesn’t expect Greece will default on its debt and anticipates Europe will be able to overcome its crisis through reform, he told reporters." So, first the bank recap rumor refuted, and now the China bailout one... Perfect: it means that the upcoming week will see brand "new" rumors talking about... bank recaps and a Chinese bailout of Europe.

More from Bloomberg:

Group of 20 finance chiefs pledged coordinated efforts to tackle rising risks this week as Greece teeters on the brink of default and stocks around the world plunged. Attention has focused on the potential for emerging economies to aid Europe as Japan and the U.S. tackle their own expanding debt burdens and sluggish growth.


“Some are studying and proposing to increase the size of the EFSF,” Zhou said, referring to the European Financial Stability Facility. “That needs to be done by the European countries.”


Chinese Central Bank Deputy Governor Yi Gang said last week that the “real solution” to Europe’s woes must come from within the region, while noting that the world’s second largest economy can help Europe “at the margin.” Addressing whether China Investment Corp. will buy euro-area bonds, Vice Chairman Gao Xiqing said in a panel the company can’t be a “savior” of others because it must keep a certain level of profitability.

And now that the market knows what it is missing, we give it 6 hours to process all this massively incongruent data.


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Sun, 09/25/2011 - 14:45 | 1708120 GeneMarchbanks
GeneMarchbanks's picture

The Euro, it never dies...

... on second thought you can say the same for the dollar and yen, wait there's a pattern emerging here how odd.

Sun, 09/25/2011 - 14:45 | 1708127 Barb Dwire
Barb Dwire's picture

It's the cancer that keeps on giving.

Sun, 09/25/2011 - 15:44 | 1708312 spiral_eyes
spiral_eyes's picture

None of those FX dollars sitting in China will be coming to European sovereign debt any time soon. China's real estate bubble is taking care of that.

But here's the worrying news: China stepping in to buy shoddy debt isn’t going to offer any  solutions to underlying problems. At best it will kick the can do the road awhile, as Europe muddles around and continues to fail to come to any kind of meaningful or coherent agreement on its future. 

Sun, 09/25/2011 - 16:08 | 1708365 JohnG
JohnG's picture

Sorry for the OT, not threadjacking but I wanted to get this toward the top.....

Anyone interested in live music might want to search on youtube for "rock in rio 2011."


Huge music festival from 9/23 - 10-2 and it's a good one.  Lot's of videos already posted and the music starts again tonight.

Here;s the link for the live feed starting at 6ET:



Something different to do while you watch to world melt.


Sorry again.  Junk away.

Sun, 09/25/2011 - 16:20 | 1708383 AldousHuxley
AldousHuxley's picture

Chinese elites are not particularly fond of the Spanish who still think they are rich:


Meanwhile educated Spaniards are trying to get a job in China:


Even before the economic crisis hit, Southern Europe was not an easy place to forge a career. Low growth and a corrosive lack of meritocracy have long posed challenges to finding a job in Italy, Greece, Spain and Portugal. Today, with the added sting of austerity, more people are left fighting over fewer opportunities. It is a zero-sum game that inevitably pits younger workers struggling to enter the labor market against older ones already occupying precious slots.


That is austerity bitches.

Sun, 09/25/2011 - 16:24 | 1708405 myne
myne's picture


They have to be thinking it.

Sun, 09/25/2011 - 18:11 | 1708632 Timmay
Timmay's picture

Yes, the pattern is, "don't move or your dead". Verbal threats, rumors and "information" holding the ship together now. There probably can't be anything definitive in terms of a "solution" otherwise the effectiveness of the rumor loses its' power. Looks to me like this strategy is buying time. For what? I would imagine it is positioning, so that "they" win and "we" lose when they are ready to let it all come down.

Psycological warfare in the truest sense.

Sun, 09/25/2011 - 18:22 | 1708667 AldousHuxley
AldousHuxley's picture

zonists are winning the brainwashing game

2nd link


people who control banking and media also control their own jews to hate non-jews and see everything through the eyes of anti-semitism. Must see rare documentary....BECAUSE AN ISRAELI JEW FILMED THE DOCUMENTARY BECAUSE HE WAS SICK OF HIS OWN SHIT.

Sun, 09/25/2011 - 14:49 | 1708146 The Fonz...befo...
The Fonz...before shark jump's picture

Manipulation Bitchez

Sun, 09/25/2011 - 14:51 | 1708150 RobotTrader
RobotTrader's picture

Futures don't mean anything.

How many times have the futures gapped up in Asia only to totally crash the next day.

Or vice versa???

Sun, 09/25/2011 - 15:11 | 1708221 St. Deluise
St. Deluise's picture

they may fail at times as everything does, but this is a wrong opinion.

there have been plenty of papers published over the last decade demonstrating they lead cash indexes more often than not. you can google those if you wish to.

logically one could conclude that information is digested more readily via these as well. the SPY still has to pay attention to what its underlying 500 stocks are doing. the /es can be bought or sold immediately according to market perception at that very moment. 

i'd actually guess it goes something like futures -> leading stocks -> cash indexes. regardless they're definitely not a derivative of anything.

Sun, 09/25/2011 - 22:20 | 1709197 snowball777
snowball777's picture

About as many times as you've pointed out ES ramping overnight like it mattered, shifferbrainz.

Sun, 09/25/2011 - 14:51 | 1708153 freeasabee1
freeasabee1's picture

ever notice how popular zombies are in todays pop culture...from games to movies to tv, maybe its saying something??!!!???

Sun, 09/25/2011 - 15:16 | 1708241 SilverRhino
SilverRhino's picture

6 Mind-Blowing Ways Zombies and Vampires Explain America

Yeah it's Cracked and a comdy article but damn it if doesn't make you think.


Sun, 09/25/2011 - 15:20 | 1708253 freeasabee1
freeasabee1's picture

great find, thxs

Sun, 09/25/2011 - 17:33 | 1708564 anony
anony's picture

What it tells us is that pop culture, our society at large,  is heading in the same direction as the economy has for the last 10 years:  Coarse, brain dead, ugly, and pull on any part of it and it comes off in your hands,  And you can't kill it.

It just reaches as far down as it can go without actually dying. Dazed, staggering, and thirsty for brains.

Sun, 09/25/2011 - 18:30 | 1708688 freeasabee1
freeasabee1's picture

its called nihilism, its here, learn to enjoy it----its just a ride-----

Sun, 09/25/2011 - 14:52 | 1708156 Hulk
Sun, 09/25/2011 - 16:45 | 1708452 tom a taxpayer
tom a taxpayer's picture

Reuters: "We need to find a mechanism where we can turn one euro in the EFSF into five, but there is no decision on how we could do that yet," another senior European official said on condition of anonymity."

"The European Union's top economic official, Olli Rehn, said as soon as the region's governments confirm new powers for their 440-billion-euro fund, known as the EFSF, attention will turn to how to get more impact from the existing money."

The EU no doubt would appreciate thoughtful suggestions from ZHers on how to turn one euro into five.

Sun, 09/25/2011 - 14:53 | 1708161 Byte Me
Byte Me's picture

Well, 1.37 can only be a session or two away then,before 1.4 again..


Sun, 09/25/2011 - 15:05 | 1708203 GeneMarchbanks
GeneMarchbanks's picture

Don't LOL. This means someone is on their keyboard spreadin' unholy digidollars...

Sun, 09/25/2011 - 15:30 | 1708282 Byte Me
Byte Me's picture


But the disclosed "plan" is to Shuffle and Twist while everyone Shouts and Raves. I wasn't Loling that it couldn't happen either.

Sun, 09/25/2011 - 15:44 | 1708314 Skid Marks
Skid Marks's picture

Soooooooo the Swiss are the front to hold the Euro up at all costs so the bet is that the EUR-CHF will remain in the $1.20 area as they have stated since the beginning of QE-Euro. Logically, and logic is often the wrong guide in these matters, the CHF should tank againt the USD, but that hasn't happened, yet. The Swiss are going to have to abandon the EUR at some point or print exponetially to keep up with the shit storm on the horizon. When that happens the EUR will drop like a rock, so it won't happen, at least not anytime soon, I guess.


Sun, 09/25/2011 - 16:06 | 1708364 Fuh Querada
Fuh Querada's picture

Sheesh man, are those tits or goat udders?

Sun, 09/25/2011 - 14:55 | 1708167 Peter K
Peter K's picture

It's the Telegraph story about the 2bEURO EFSF. Link below. Waiting for German MinFin/Buba denial. If not coming, could try to squeeze the spec shorts :)

Sun, 09/25/2011 - 14:56 | 1708171 ISEEIT
ISEEIT's picture

Suprised? The bulls love bullshit. More bullshit = more bullishness.

Roll around in it. Sniff it. Taste it.

Real good huh?


No thanks. I only like watching gross/sad/violent shit.

I don't actually eat it.

Sun, 09/25/2011 - 14:57 | 1708178 lolmao500
lolmao500's picture

September 29 : vote in the german parliament about EFSF.

Merkel could get the boot up her arse.

Sun, 09/25/2011 - 14:57 | 1708179 Random_Robert
Random_Robert's picture

This is great news for anyone with a home in Europe, AND a home in the US....

...and a zero-cost teleporter to carry them back and forth.

Breakfast in New York, Lunch in Paris, and a seafood dinner in Boston... That's living LARGE, baby....

Sun, 09/25/2011 - 15:35 | 1708296 L G Butz PhD
L G Butz PhD's picture

and with a zero-cost teleporter, who needs PM?

btw, one in four believe humans can teleport, but I've no reliable data on how many of the one in four believe that THEY can teleport or claim they KNOW someone who has teleported. More study is needed there.

Sun, 09/25/2011 - 15:50 | 1708327 Long-John-Silver
Long-John-Silver's picture

Just make very sure a Fly is not in the teleport booth when it's powered up. 

Sun, 09/25/2011 - 16:23 | 1708398 Random_Robert
Random_Robert's picture

I know... I hate it when my ears fall off shortly after getting busy with bar skanks...

Sun, 09/25/2011 - 15:01 | 1708187 TruthInSunshine
TruthInSunshine's picture

EUR = parity with USD within 3 months maximum (critical mass equals acceleration of timelines), before falling apart and being reconstituted in whatever form realpolitik dictates, however fragmented and dislocated that may be.

Sun, 09/25/2011 - 16:04 | 1708360 Fuh Querada
Fuh Querada's picture

Friend, I will bet you a silver eagle to a used condom that no country will leave the EUR. Simple reason: this would involve thousands of bureaucrats in Brussels becoming superfluous and spheres of influence of the unelected kleptocracy at the seat of EU-power being eliminated. And this multiplied by the number of PIIGS purported to leave.

Sun, 09/25/2011 - 20:53 | 1708384 TruthInSunshine
TruthInSunshine's picture

The truth was let out too loudly and quickly and they can't stuff it back in the tube.

Those in Europe who are solvent, responsible and who saved and paid their obligations now know that the people driving the EU want to sacrifice not only them, but turn their children and grandchildren into indentured servants, to perpuate an unjust, immoral and financial hazard of a wealth redistribution system, which is an unsustainable system no matter how much grist for the mill is made of the responsible.

The new universe and structure of information dissemination has awakened those in Europe (and elsewhere) to some very ugly truths, and it has outpaced the ability of the politicians and globalists to suppress the fuel that will power the upheaval.

Sun, 09/25/2011 - 15:17 | 1708237 Duffminster
Duffminster's picture

The Chinese just want Europe's Gold and it appears the Fed and their possie of UK, Swiss, Japanese central banks are ready to give it them so that they can get through next election cycle and move all of US corporations to China and leave the people of the western world without anything except for worthless fiat money and bonds.

Deflationary Depression & Default or Debt Monetization and Inflation - Gold and Silver remain Honest Money. Duffminster
Sun, 09/25/2011 - 15:40 | 1708305 SamAdams1234
SamAdams1234's picture

It is truely amazing how few are able to make teh connection with the fall of the western Roman empire. 476 AD bitchez.... Where is Constantinople when you need it?


Sun, 09/25/2011 - 15:16 | 1708238 Mike2756
Mike2756's picture

It was stretched here, gapfill or bounce to S2? (138.5 on fxe)

Sun, 09/25/2011 - 15:16 | 1708240 IMA5U
IMA5U's picture

the odds are the markets are in the green on monday.  the sell off has been to fast and severe, the market would not go red on friday, financials were green, its quarter end, and the rumor machine is full gear


these rallies are amazing.  hold on tight.

Sun, 09/25/2011 - 15:26 | 1708272 TruthInSunshine
TruthInSunshine's picture

You and everyone else relying on the relief rally book have yet to come to grips with the fact that the great deleveraging (of 30 years of epic and purely credit based [false] expansionary growth) is underway, and that 2008 was just a prelude to what will be forced liquidation of the family jewels.

It's Harvest time.

I am not saying there won't be days, whether Monday or whenever, where 'they' can't and won't paint the tape, but I am saying that 'they' don't have the ability to do so nearly as often or in as great a direction as in the past, given the great deleveraging tsunami now underway.

Witness the final, desperate gasps of a dying economic structure that was built on a foundation of pillars of salt and sand.

Sun, 09/25/2011 - 15:23 | 1708258 falak pema
falak pema's picture

they're all queuing up to bail the Euro out. Its like visiting Mme Tussaud's where its opening night for the new wax mummy of the latest addition to the hall of dinosaurs...But lets wait until November 3 at Cannes, its just a few days before Guy Fawkes day and the fireworks.

Sun, 09/25/2011 - 15:28 | 1708277 Pretorian
Pretorian's picture

Why the fuck China needs strong euro when they have 3 trillion of $ in reserves. Weaker $ not only means lose for China but less purchasing power for shopping around world.

Sun, 09/25/2011 - 15:37 | 1708301 ISEEIT
ISEEIT's picture

Sense makes no sense though. Chaos is like that. Just hang on. You and I won't understand this until after it is over.

Sun, 09/25/2011 - 15:35 | 1708294 Absalon
Absalon's picture

The last thing Europe should want is China's help - which would just be more currency manipulation by China. 

Sun, 09/25/2011 - 23:07 | 1709289 slewie the pi-rat
slewie the pi-rat's picture

paper ponzi pyramid porn

...more debt, too! 

Sun, 09/25/2011 - 15:41 | 1708306 PulauHantu29
PulauHantu29's picture

But...but...China is supposed to "lead us out of recession" said Mr. Soros.....


Sun, 09/25/2011 - 15:44 | 1708316 magpie
magpie's picture

Leadership entails taking the brave step off the cliff first.

Sun, 09/25/2011 - 15:53 | 1708334 buzlightening
buzlightening's picture

Another historical collapse. western bankstering in bed with dead head governments have failing debt gone wild.  I read the end of this same fiat system when I was young and dumb.  I still get it and it's nothing but ashes, pain, & suffering for the sheeple.  World war III here we come.   It will be an annihilation of  greedsters killing greedsters; for what could not be obtained through mutual honest sound money and fiscal responsibility to match.  World nations under fraud.  Too bad, I'm so sad!!

Sun, 09/25/2011 - 16:00 | 1708351 gnomon
gnomon's picture

The fun has not yet begun.  Wait until the level of austerity in Greece seeps into every holler in The West.  (And that must happen eventually one way or another).  Hold tight to your pms and sleep with your shotgun at your side.

Sun, 09/25/2011 - 16:04 | 1708362 paul_Liu
paul_Liu's picture

"We can't just go save someone. We're not saviors. We have to save ourselves," said Gao Xiqing, president of China Investment Corp.

From WSJ

Sun, 09/25/2011 - 16:21 | 1708395 Outlaw Of The W...
Outlaw Of The Wasteland's picture

Doom is off the menu boys.  For today at least.

But the bill will come due.  That is for sure.

Sun, 09/25/2011 - 16:33 | 1708424 Peter K
Peter K's picture

The more I think about it, the more it looks like Germany just got triple teamed into agreeing to a leveraged EFSF to the tune of 2tEuro +. Here's what happened. The Greeks were pushing a 50% writedown. The Germans wanted the writedown but not the EFSF commitment. The G20 picked up the ball and ran with the 50% haircut (you wanted it Krauts), but in return wanted the Germans to guarentee the 2tEuro EFSF. And when the Germans didn't want to go along with the plan, the French/IMF came along and said that if the Germans don't cave now, the IMF will not help out in the future because they will not have the funds. Game,set, match. So the Germans either take the deal, or their Euro falls apart and their Fourth Reich Dream goes down the shitter:)  All we are waiting for now is the confirmation from some unofficial source from the German MinFin/Buba that they will comply. No statement/leak is a confirmation that the Germans have been played:) 

Sun, 09/25/2011 - 18:45 | 1708735 topcallingtroll
topcallingtroll's picture

I think u nailed it!

Btfd now.

Risk on is the new risk off

Sun, 09/25/2011 - 16:37 | 1708429 tom a taxpayer
tom a taxpayer's picture


Breaking News Update: Geithner releases 5 hostages, 10 EU Finance Ministers remain hostage in U.S. Treasury vault.

At 1:30 pm Sunday Washington D.C. Capitol police announced that Treasury Secretary Geithner released 5 hostages but still holds 10 EU Finance Ministers hostage in the U.S. Treasury vault where he lured them on the pretext of a post-IMF cocktail party. Geithner appears more frantic and is now demanding that the EU governments pledge before the markets open in Guam tonight to use American-style leverage to solve the Euro sovereign debt crisis and bolster the markets. 

Link to earlier events:



Sun, 09/25/2011 - 16:47 | 1708460 SilverFocker
SilverFocker's picture

The more China bails, the less Chins has, a few more times and China may find that they are the one who are in need of a bailout.

Pouring this amount of inflation into billions of China worker bees could have a switch-back effect that brings wages on par with the US making it a not so good investment to relocate there........take chances on a few hundred million hungry or a couple of billion hungry.

US companies relocating to China had the upper hand, that fact is no longer holding value. China's reality is really fucked more than ours. 

Sun, 09/25/2011 - 17:09 | 1708523 Black Forest
Black Forest's picture

Tyler, that is no "sustainable" news. I do appreciate your analyses but not reports about statistically random shiver.

Sun, 09/25/2011 - 18:05 | 1708622 Docinthedark
Docinthedark's picture

weakening again right now.

Sun, 09/25/2011 - 18:35 | 1708707 topcallingtroll
topcallingtroll's picture

As I said several weeks ago regarding china, "they will offer to piss on you to put out the fire and then be annoyed that u were not grateful."

Did u see china's paltry offer?
Did u see what they expected in return? No more human rights criticisms, "free economy" status, and unfettered access to any and all technology exports.

The europeans are now ignoring the chinese as irrelevant.

I understand the chinese psychology. They occasionally slip when drunk and let it out like that chinese diplomat did.

They are the angry, poor resentful person. They think they are as good as white folk. They realize they are in an inferior position and blame their status entirely on 19 th century western colonization. They think they are smarter than all those rich white folk, yet they are very primitive in their grasp of finance, currency markets, central bank intrigue and macroeconomic policy and end up getting punked a lot because they are the classic rube who thinks he is smarter than the con man. They think very small and are extreme misers. They are like the guy who reaches in his pocket to pull out some change for the restaurant tip. They are like a poor angry guy in so many ways. A billion dollars is big money to them, and they really thought their offer of assistance was worth what they asked. They are the annoying guy who wastes real estates agents' time with ridiculous low ball offers, and then wonder why they are blacklisted in the community and no one will deal with them.

But it is of course all the white man's fault

Sun, 09/25/2011 - 19:13 | 1708806 msmith
msmith's picture

Bearish price action for Gold last week.  Here is an interesting bearish bias analysis after a short term upcoming correction.

Sun, 09/25/2011 - 19:20 | 1708825 Vint Slugs
Vint Slugs's picture

More on gold and silver downside:

Sun, 09/25/2011 - 19:37 | 1708870 msmith
msmith's picture
Longer term equities picture seems very bearish
Sun, 09/25/2011 - 20:17 | 1708955 PulauHantu29
PulauHantu29's picture

Bear attacked in Idaho that what you mean?

Sun, 09/25/2011 - 19:46 | 1708891 papaswamp
papaswamp's picture

China is going to wait and get some cheap Greek, Italian and Portugese shipping companies and ports on the uber cheap. Why spend huge risky bailout cash when you can get the stuff on the cheap at the firewall sale? Talk about some fantastic strategic positioning....

Sun, 09/25/2011 - 21:09 | 1709070 paul_Liu
paul_Liu's picture

Now the EU is down.

A few buys from some governments can not chnage the reality.

Sun, 09/25/2011 - 21:28 | 1709107 chirobliss
chirobliss's picture

Here it comes, the tsunami of endless optimism..

7:48 PM Stock index futures are sharply higher in early Sunday trade, perhaps encouraged by chatter about a €TARP and a vast expansion of the EFSF, or maybe just bouncing after last week's bloodletting. S&P 500 +1.2%, German DAX +1.2%.

Mon, 09/26/2011 - 02:49 | 1709739 Flatchestynerdette
Flatchestynerdette's picture

Are they tone deaf? Christine Lagarde just said the IMF needs a bailout.....I'm not kidding. She told the Telegraph that the IMF needs billions in extra funding. Who is she going to pick up the phone and call?

Sun, 09/25/2011 - 21:50 | 1709142 RazorForex
RazorForex's picture

I would be very carefull with any euro shorts right now. We are at a very significat area. The 1.3400 is a big price pivot.

Sun, 09/25/2011 - 23:22 | 1709309 alien-IQ
alien-IQ's picture

if 1.34 breaks, there's pretty much nothing but air all the way down to 1.28.

I think we see a break of 1.34 this week if not later tonight.

Sun, 09/25/2011 - 22:23 | 1709203 snowball777
snowball777's picture's gone again. Tune in next time for the continued adventures of Zooorrrroooo. LOL



Sun, 09/25/2011 - 23:42 | 1709333 besnook
besnook's picture

silver is screaming, buy me!


i am surprised russia is so silent on all this theater. china is, at least, openly trying to extort the euros. they just want a counter offer, anything to legitimize the yuan as a potential reserve currency.  c'mon euro(germany and france). timmy already told you the usa would print more to backstop a massive euro print so, print baby print.

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