Tuesday, Mar 02, 2010
Who this golden child is that GBP will have this crisis against?
FT Alphaville: 'Talk of a GBP crisis seems like hysterical claptrap’
David Bloom, Global Head of FX Research for HSBC - "The analysts that are putting the GBP crisis view are the very same analysts who seem to be simultaneously predicting the break up of the euro and a GBP crisis whilst only last year telling us the USD was finished and losing its reserve currency status."
Posted by mountain goat @ 12:13 PM (1688 views) Add Comment
18 Comments
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1. mountain goat said...
Please excuse that my English so bad is.
2. mark wadsworth said...
Agreed, we may be going down the tubes but so are most other countries.
3. Crunchy said...
All currencies are taking a hit. USD? It ain't over til it's over.
4. icarus said...
Maybe it's the 'Pru' needing all those £s to buy $s to buy AIA (the Asian subsidiary of AIG) - and maybe the worry there is that AIA will insure the loans made by Chinese banks to build bridges to, er, other bridges.
5. techieman said...
"last year telling us the USD was finished and losing its reserve currency status" anyone on this blog want to seek absolution? Dont be shy!
6. mountain goat said...
Icarus as I understand it the Pru AIA story was to do with currency hedging because the deal was in $. Pru would have hedged itself against a GBP fall which would make AIA much more expensive. But then is a few billion going to move the market so much? Hence the pissing in a swimming pool discussion yesterday between TM and FM.
Personally I think the dollar and euro has been range bound for the past few weeks, so speculators are playing elsewhere while market decides on these two big currencies. My amateurs opinion is that the dollar has one last surge up before a significant correction down to flush out the euro shorts. After that the dollar continues being "the trade of 2010", that it has been so far.
7. paranoia blue said...
Nevertheless, gold is still, very much, holding its own!
8. bellwether said...
http://marketoracle.co.uk/Article17594.html
A genuinely good stab at £ v $ over next 2/3 months from Nadeem W. He sees parity IF we get a hung parliament, although overall message is that with uncertainty running high up to election no better time for traders to attack the £.
9. jack c said...
Latest on Citywire - "Euro may not survive the crisis"
As nerves grow about Greece’s path to health (perhaps that should read Hell), the euro continues to extend its losing streak against the dollar. Today it dropped to its lowest for 10 months against the dollar, stooping to $1.343.
Full story @ www.citywire.co.uk/personal/-/news/money-property-and-tax/content.aspx?ID=385388
10. Fra Paolo said...
Walayat is a crepe-hanger, as my mother would say. He always puts a negative gloss on his UK forecasts, but leaves a few weasel words that enable him to tout his analytical abilities after the dust has settled. Typical Briton, always negative about their country.
If you follow a link supplied by TheWord in the comments to this FT blog, you'll be taken to a chart showing pound fluctuations over the last decade. While not always as extreme as the last two years, there does seem to be a tendency for sterling to fall at this time of year. I'm guessing it has something to do with tax years.
We won't know the real trend for a couple of months. Sterling might head back upwards, like it did last year, or it might bump along at $1.30 or so until the next piece of wisdom floats into the forex markets.
11. icarus said...
mg - is a few billion going to move the market that much? Well it's a trace of blood, added to another couple of traces (hung parliament?, weak economic numbers) that could attract the sharks to take a bite or two.
12. mountain goat said...
Jack c - you are right a bailout looks like a path to hell. Greece like Ireland, is being forced into deflation. It's a bailout of German banks not a bailout of Greece.
Seems to me that the Euro can only work if there is more political and social union. The rich countries have to support the weak, just like in England there are more deprived areas that receive benefits because there are more wealthy areas like London. Germans paying towards Greek pensions? Can't see that going down well. But without this there will be political and social upheaval. The Germans like the idea of a bigger open market but not the responsibility when the weaker countries get weaker.
13. mountain goat said...
icarus - Interesting that in the Pru AIA story it was HSBC who were supposedly doing the currency hedging for Pru, so maybe this emotional opinion by their HSBC Head of FX to talk up GBP is a bit of embarrassed damage limitation?
"Indeed, HSBC, which is one of the Pru’s advisers, is rumoured to have been in the market selling sterling and buying options."
http://ftalphaville.ft.com/blog/2010/03/01/161081/the-pru-and-the-great-british-peseta/
14. techieman said...
Mg @ 6:
",,,,Now as for the £/$ ... thats a different story. [incidentally Mr P has been massively bullish on the dollar - and made a pretty good call near the low, and the index has broke resistance to the upside. All of this since the dollar low may be the first move with a significant retracement (maybe or maybe not in £ terms) before the dollar ramps up. Of course a fall in the dollar will get the dollar collapse boys salivating!]
Tuesday, March 2, 2010 07:43AM "
Looks liek we are either both gonna be right or wrong together!
15. mountain goat said...
TM - do you think we get one more $ push up before the retracement or just down from here? The reason I think so is because the last few weeks USD/Euro looks like market indecision, which I expect to resolve in the direction of the recent trend (perhaps triggered by stocks falling hard). But the trouble is too many players on the same side of the boat betting against the Euro so upside seems limited for the dollar. On the other hand I was surprised how long the dollar remained in just the same extreme negative sentiment last year. So maybe now the opposite extreme lasts for some time. I look forward to seeing how it resolves.
Apologies to Sarah et al for the off topic comments.
16. debtfree said...
@ 5. techieman
"last year telling us the USD was finished and losing its reserve currency status" anyone on this blog want to seek absolution? Dont be shy!
Busy day today techieman with our exchanges.
I'm prepared to stick my neck out and say that the dollar will lose it's reserve status. It's just a matter of time and a race to the bottom for western currencies, the dollar has a head start as it's the current reserve currency. I see gold climbed nicely today, not only $ but virtually all currencies. If the dollar was strong, this wouldn't be happening.
The dollar is going down with the rest of the fleet, the bigger they are the harder they fall.
17. techieman said...
MG@14 - just got back in (home i mean not in the Euro / $). Really it looks like one more drop but i really wouldnt give it more than a 50/50 chance. Especially since the candle closed right at the top. In any case i wouldnt be exposed to much of it now. If you havent been short somewhere between the top and now, then the risk, imo is just not worth it. The patient vulture. I am virtually square myself, looking for the retrace.
debtfree- aha a matter or time! well in time we can always be right about everything. Sadly that aint how it works. I was actually a bit peeved when someone told me how stupid i was to say that the dollar would appreciate towards the end of last year, when it was about to turn - i think i got it to the day, I specifically said against the Euro. And the rest ... as they say.. is history.
Yes the $ may very well lose its status and yes there may be hyper-inflation, but personally i wouldn't be betting on either of those in my - admittedly short - time span. IF these were to happen, there will be plenty of warning first.
"I see gold climbed nicely today, not only $ but virtually all currencies. If the dollar was strong, this wouldn't be happening." Not too sure about that one, but as i said this morning :
"Actually HPW - there has been a downward sloping trendline break from the top, with a "back-test" of that line. If it breaks $1074 thats probably bearish. If it doesnt it may start marching on a bit.
Tuesday, March 2, 2010 11:41AM" - http://www.housepricecrash.co.uk/newsblog/2010/03/blog-on-the-way-to-ounce-27981.php
oh and if you dont know a "back test" in this context means a break of a prior trendline, in this case on gold joining the high to the next lower high, which then got broken to the upside, and then that line got re-tested, i.e. now as support where it was previously resistance.
The blue line on this is an example, albeit the opposite of the Gold situation : http://4.bp.blogspot.com/_OY0Kpjc3VHk/S4xRrnbrnKI/AAAAAAAABk4/Lk3yEj5sesM/s1600-h/SPX.png
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