What's Happening On Forex?

[ingermany]

Why is it, that after Ambrose Evans Pritchard forecast the demise of the Euro on Monday, by Wednesday it has "soared" (in Daily Exprees parlance) by 2% against Sterling and Dollar. Even after the negative news vis a vis possible IMF intervention, collapse of Portugal and Ireland, General Strike in France etc etc. the Euro is going up and up. And it's not just Sterling weakness...Euro is up against everything. Does anyone know the rationale (if any). AEP

[Toto deVeer]

Why is it, that after Ambrose Evans Pritchard forecast the demise of the Euro on Monday, by Wednesday it has "soared" (in Daily Exprees parlance) by 2% against Sterling and Dollar. Even after the negative news vis a vis possible IMF intervention, collapse of Portugal and Ireland, General Strike in France etc etc. the Euro is going up and up. And it's not just Sterling weakness...Euro is up against everything. Does anyone know the rationale (if any). AEP

Short covering?

Does the market expect QE2 from the US and UK but not the ECB?

Principles of quantum physics at play? Speculators occupying two states at the same time?

[Lord Lister]

Its more about $ weakness after helicopter ben announced they would continue printing as and when th US economy needed it. Fear not though there is a race on to devalue all western currencies, so once the $ has finished it turn, the Euro and pound will have theirs again. Target .72 on the $ index by end of year imo

Why is it, that after Ambrose Evans Pritchard forecast the demise of the Euro on Monday, by Wednesday it has "soared" (in Daily Exprees parlance) by 2% against Sterling and Dollar. Even after the negative news vis a vis possible IMF intervention, collapse of Portugal and Ireland, General Strike in France etc etc. the Euro is going up and up. And it's not just Sterling weakness...Euro is up against everything. Does anyone know the rationale (if any). AEP

[Laura]

Maybe this explains the Euro surge?

"I believe that the debt crisis affecting Spain, and the euro zone in general, has passed," Mr. Zapatero said in an interview with The Wall Street Journal on Tuesday.

One lesson learned from the market turbulence that hit the euro zone in recent monthsis that a single monetary policy isn't enough for the European Union, Mr. Zapatero said. "We require further convergence to boost competitiveness, and stronger principles to implement balanced economic and fiscal policies."

Spot the point where 'someone' burst out laughing

http://online.wsj.com/article/SB10001424052748704129204575506182829904198.html

[Toto deVeer]

Maybe this explains the Euro surge?

Spot the point where 'someone' burst out laughing

http://online.wsj.com/article/SB10001424052748704129204575506182829904198.html

Merkel's reaction:

[General Congreve]

Why is it, that after Ambrose Evans Pritchard forecast the demise of the Euro on Monday, by Wednesday it has "soared" (in Daily Exprees parlance) by 2% against Sterling and Dollar. Even after the negative news vis a vis possible IMF intervention, collapse of Portugal and Ireland, General Strike in France etc etc. the Euro is going up and up. And it's not just Sterling weakness...Euro is up against everything. Does anyone know the rationale (if any). AEP

It's a race to the bottom. Japan devalued the other day, in response Bernanke basically stated on Tuesday that more QE is on the way, thereby devaluing the dollar. The Chinese in particular are selling dollars and buying Euro and Swiss Francs. You can tell that from looking at the gold price today relative to a number of currencies:

http://www.usagold.com/gold-price-forex.html

Why investors just don't buy gold straight away and have done with this charade I don't know (guess it's the banks playing to win on the roulette wheel plus unnecessary, and ultimately loss making, diversification investment strategies by others), but the writing is on the wall and gold's relentless march upwards in all currencies continues (look at 5 year charts in same link).

Edited September 22, 2010 by General Congreve

[Democorruptcy]

Why is it, that after Ambrose Evans Pritchard forecast the demise of the Euro on Monday, by Wednesday it has "soared" (in Daily Exprees parlance) by 2% against Sterling and Dollar. Even after the negative news vis a vis possible IMF intervention, collapse of Portugal and Ireland, General Strike in France etc etc. the Euro is going up and up. And it's not just Sterling weakness...Euro is up against everything. Does anyone know the rationale (if any). AEP

Reported yesterday:

Sterling hit a two-month low against the euro on Tuesday as the single currency rose on robust investor demand for Irish and Greek government paper, which eased concerns about euro zone peripheral sovereign debt.

http://uk.reuters.com/article/idUKLDE68K1TK20100921

[ParticleMan]

It's mostly a liquidity imbalance - larger funds rebalancing at end of quarter, in this case reducing positions in euro denominated assets and shifting to holding overnight cash and other risk free assets.

Note the reasonably well correlated moves in Euro stock indicies, and spot commodities across the session.

Idiocy.

Writ large.

[Toto deVeer]

It's a race to the bottom. Japan devalued the other day, in response Bernanke basically stated on Tuesday that more QE is on the way, thereby devaluing the dollar. The Chinese in particular are selling dollars and buying Euro and Swiss Francs. You can tell that from looking at the gold price today relative to a number of currencies:

http://www.usagold.com/gold-price-forex.html

Why investors just don't buy gold straight away and have done with this charade I don't know (guess it's the banks playing to win on the roulette wheel plus unnecessary, and ultimately loss making, diversification investment strategies by others), but the writing is on the wall and gold's relentless march upwards in all currencies continues (look at 5 year charts in same link).

Quite complicated.

China launched a strategy to increase the Yen by buying Samurai Bonds. Japan countered by intervening on the currency market. This upset the US (but China is the culprit).

So the US has countered by sayihg to the whole world "Don't even think about what Japan just did, ours is bigger than yours and you will get squashed".

Meanwhile China hangs on to the dollar like a leach to a dying patient, and the US trade deficit continues to increase. It does not matter how low the dollar goes, the trade deficit is still increasing and China is the export beneficiary.

China is the problem here. There are enormous geopolitical strains building in the South Asia region. China has just deployed warship(s) to Myanmar. Japan has just seized Chinese fishing vessels near disputed islands between the two countries. The US is working with Taiwan on a more aggressive strategy to counter China. And remember that South Korea recently found one of their ships has been sunk by a North Korean torpedo (NK being a puppet state of China). Meanwhile China has just deployed missiles with the capability to sink US aircraft carriers (for which reportedly the US Navy has no counter). And China has a new fully operational nuclear submarine base on Hainan Island (complete secret to the world until very recently).

I believe that China is waging war on the United States indirectly through the currency markets. She is cleverly trying to put wedges between the US and her ASEAN allies and will soon be probing for signs of weakness. It would not surprise me to wake up tomorrow and hear that a US or Japanese ship had been sunk in the seas off the coast of China. What is the US going to do with no money left and currency turmoil? Invade China? These will be the tests that the ASEAN group will be watching. As much as they fear China, they will migrate to the stronger power, in the end. It's going to be a tit-for-tat situation until sides are aligned.

The problem now for the US is that the whole world is like a bee hive, and China is the Queen Bee. Everywhere the US goes she gets stung. No individual sting will bring her down, but in total the ultimate effect will be fatal, if she continues on this course. China is happy to watch this play out, seeing the victim slowly die. While this is happening China is building up sophisticated finance capability in Hong Kong. When the dollar dies, the Yuan will be cut loose and floated, and the job will be done.

And that, my friends, will be the end of Anglo and Euro centric finance dominance, and usher in the new age of Asian finance dominance. You will know this is true when the Gulf oil lanes open up to Chinese naval power.

EDIT: I will just add that the parasitic interplay between China and the US (where China is benefiting by having a currency pegged to a very weak host) is also being identically replicated by Germany and the PIIGS of Europe. Both the worlds manufacturing export powers are playing the same game. Perhaps it is China that is trying to push up the Euro, to fend off Germany. After all, Germany (or the ECB) cannot buy Yuan to retaliate, can they?

Edited September 22, 2010 by Toto deVeer

[Game_Over]

Quite complicated.

China launched a strategy to increase the Yen by buying Samurai Bonds. Japan countered by intervening on the currency market. This upset the US (but China is the culprit).

So the US has countered by sayihg to the whole world "Don't even think about what Japan just did, ours is bigger than yours and you will get squashed".

Meanwhile China hangs on to the dollar like a leach to a dying patient, and the US trade deficit continues to increase. It does not matter how low the dollar goes, the trade deficit is still increasing and China is the export beneficiary.

China is the problem here. There are enormous geopolitical strains building in the South Asia region. China has just deployed warship(s) to Myanmar. Japan has just seized Chinese fishing vessels near disputed islands between the two countries. The US is working with Taiwan on a more aggressive strategy to counter China. And remember that South Korea recently found one of their ships has been sunk by a North Korean torpedo (NK being a puppet state of China). Meanwhile China has just deployed missiles with the capability to sink US aircraft carriers (for which reportedly the US Navy has no counter). And China has a new fully operational nuclear submarine base on Hainan Island (complete secret to the world until very recently).

I believe that China is waging war on the United States indirectly through the currency markets. She is cleverly trying to put wedges between the US and her ASEAN allies and will soon be probing for signs of weakness. It would not surprise me to wake up tomorrow and hear that a US or Japanese ship had been sunk in the seas off the coast of China. What is the US going to do with no money left and currency turmoil? Invade China? These will be the tests that the ASEAN group will be watching. As much as they fear China, they will migrate to the stronger power, in the end. It's going to be a tit-for-tat situation until sides are aligned.

The problem now for the US is that the whole world is like a bee hive, and China is the Queen Bee. Everywhere the US goes she gets stung. No individual sting will bring her down, but in total the ultimate effect will be fatal, if she continues on this course. China is happy to watch this play out, seeing the victim slowly die. While this is happening China is building up sophisticated finance capability in Hong Kong. When the dollar dies, the Yuan will be cut loose and floated, and the job will be done.

And that, my friends, will be the end of Anglo and Euro centric finance dominance, and usher in the new age of Asian finance dominance. You will know this is true when the Gulf oil lanes open up to Chinese naval power.

EDIT: I will just add that the parasitic interplay between China and the US (where China is benefiting by having a currency pegged to a very weak host) is also being identically replicated by Germany and the PIIGS of Europe. Both the worlds manufacturing export powers are playing the same game. Perhaps it is China that is trying to push up the Euro, to fend off Germany. After all, Germany (or the ECB) cannot buy Yuan to retaliate, can they?

Very interesting - so China is propping up the Euro in order to turn a swift clean death into a slow agonising death?

[Stay Beautiful]

Quite complicated.

China launched a strategy to increase the Yen by buying Samurai Bonds. Japan countered by intervening on the currency market. This upset the US (but China is the culprit).

So the US has countered by sayihg to the whole world "Don't even think about what Japan just did, ours is bigger than yours and you will get squashed".

Meanwhile China hangs on to the dollar like a leach to a dying patient, and the US trade deficit continues to increase. It does not matter how low the dollar goes, the trade deficit is still increasing and China is the export beneficiary.

China is the problem here. There are enormous geopolitical strains building in the South Asia region. China has just deployed warship(s) to Myanmar. Japan has just seized Chinese fishing vessels near disputed islands between the two countries. The US is working with Taiwan on a more aggressive strategy to counter China. And remember that South Korea recently found one of their ships has been sunk by a North Korean torpedo (NK being a puppet state of China). Meanwhile China has just deployed missiles with the capability to sink US aircraft carriers (for which reportedly the US Navy has no counter). And China has a new fully operational nuclear submarine base on Hainan Island (complete secret to the world until very recently).

I believe that China is waging war on the United States indirectly through the currency markets. She is cleverly trying to put wedges between the US and her ASEAN allies and will soon be probing for signs of weakness. It would not surprise me to wake up tomorrow and hear that a US or Japanese ship had been sunk in the seas off the coast of China. What is the US going to do with no money left and currency turmoil? Invade China? These will be the tests that the ASEAN group will be watching. As much as they fear China, they will migrate to the stronger power, in the end. It's going to be a tit-for-tat situation until sides are aligned.

The problem now for the US is that the whole world is like a bee hive, and China is the Queen Bee. Everywhere the US goes she gets stung. No individual sting will bring her down, but in total the ultimate effect will be fatal, if she continues on this course. China is happy to watch this play out, seeing the victim slowly die. While this is happening China is building up sophisticated finance capability in Hong Kong. When the dollar dies, the Yuan will be cut loose and floated, and the job will be done.

And that, my friends, will be the end of Anglo and Euro centric finance dominance, and usher in the new age of Asian finance dominance. You will know this is true when the Gulf oil lanes open up to Chinese naval power.

EDIT: I will just add that the parasitic interplay between China and the US (where China is benefiting by having a currency pegged to a very weak host) is also being identically replicated by Germany and the PIIGS of Europe. Both the worlds manufacturing export powers are playing the same game. Perhaps it is China that is trying to push up the Euro, to fend off Germany. After all, Germany (or the ECB) cannot buy Yuan to retaliate, can they?

very good stuff. Though the two Chinese warships berthed at Myanmar for a 5 day friendship visit. I understand that our Indian friends were a wee bit miffed.

[Toto deVeer]

Very interesting - so China is propping up the Euro in order to turn a swift clean death into a slow agonising death?

My view is that China is not yet ready to cut loose from the dollar, neither is there a pressing need. That's a few years away, but not as many as one would expect. But buying Euros weakens her main competitor Germany. That makes sense doesn't it?

I'm not completely clear on this, but how would Gerrmany/ECB counter Chinese buying Euros? They cannot buy Yuan, so they have to buy dollars, no? But the US has indirectly implied in the last FOMC meeting that she will do everything in her power to counter actions like that of Japan. The ECB is in a bit of a pickle, it seems, if China misbehaves in this way.

[Toto deVeer]

very good stuff. Though the two Chinese warships berthed at Myanmar for a 5 day friendship visit. I understand that our Indian friends were a wee bit miffed.

Yes. India is a bit of a wild card, with continuing ties to Russia.

I also forgot to mention that China is building a navy base in the north of Sri Lanka, about which India is not pleased, no doubt.

Edited September 22, 2010 by Toto deVeer

[aa3]

I really enjoy reading Ambrose's articles.. but I think he is wrong on the Euro. Yes there is some serious issues that have emerged and more will emerge in the years to come. But they are not insurmountable. For example there was a reasonable solution to the Greek, Irish, Spanish debt problem.

Europe has such a strong economy, when you look at it as a whole. And so huge in scale. That a currency across the whole thing is always going to have a lot of value. The hugeness of Europe gives the currency even more value. When you invest in say Norweigan currency, if oil tanks that currency will tank. But across all of Europe there is so many sectors that it stabilizes the value.

[LiveAndLetBuy]

Why is it, that after Ambrose Evans Pritchard forecast the demise of the Euro on Monday, by Wednesday it has "soared" (in Daily Exprees parlance) by 2% against Sterling and Dollar. Even after the negative news vis a vis possible IMF intervention, collapse of Portugal and Ireland, General Strike in France etc etc. the Euro is going up and up. And it's not just Sterling weakness...Euro is up against everything. Does anyone know the rationale (if any). AEP

AEP is not talking about the demise of the euro as a currency, but the demise of certain countries that have condemned themselves to using it as their currency. Indeed it's the strength of the euro that is exacerbating the problem for those countries (and in turn the banks from the other euro countries that have lent to them).

[ParticleMan]

Europe has such a strong economy, when you look at it as a whole. And so huge in scale. That a currency across the whole thing is always going to have a lot of value. The hugeness of Europe gives the currency even more value. When you invest in say Norweigan currency, if oil tanks that currency will tank. But across all of Europe there is so many sectors that it stabilizes the value.

Full bellies are the root of all confidence.

Or something like that.

Everything else is ebb and flow.

And apart from our good friends over in fair Helvetia (who played some exceedingly good cricket today - sheer poetry, our lisping Frankish friends), today we saw more ebb than flow.

We'll see how long the funds can last - the lesson the ECB learned today is that savers are on the whole delighted to have their nest eggs looted - at hypergalactic speeds.

I expect the ECB will pleasure them by raising liquidity commensurately, and forthwith.

What Injin's wrong about is that compulsion turns out to be unecessary - this one's beautifully fractal in nature, and the blocks it's built from defective.

[Game_Over]

My view is that China is not yet ready to cut loose from the dollar, neither is there a pressing need. That's a few years away, but not as many as one would expect. But buying Euros weakens her main competitor Germany. That makes sense doesn't it?

I'm not completely clear on this, but how would Gerrmany/ECB counter Chinese buying Euros? They cannot buy Yuan, so they have to buy dollars, no? But the US has indirectly implied in the last FOMC meeting that she will do everything in her power to counter actions like that of Japan. The ECB is in a bit of a pickle, it seems, if China misbehaves in this way.

They could always print more Euros?

At this rate China is going to be left holding another fist full of worthless paper

[Game_Over]

I really enjoy reading Ambrose's articles.. but I think he is wrong on the Euro. Yes there is some serious issues that have emerged and more will emerge in the years to come. But they are not insurmountable. For example there was a reasonable solution to the Greek, Irish, Spanish debt problem.

Europe has such a strong economy, when you look at it as a whole. And so huge in scale. That a currency across the whole thing is always going to have a lot of value. The hugeness of Europe gives the currency even more value. When you invest in say Norweigan currency, if oil tanks that currency will tank. But across all of Europe there is so many sectors that it stabilizes the value.

You are joking ???

Aren't you ???

[Pauly_Boy]

You are joking ???

Aren't you ???

Well lets look at where the most devoloped economies in the world are ... !

You may point and laugh at them, but look at the alternatives and you soon realise they're still worthy of investment.

[Killer Bunny]

Why is it, that after Ambrose Evans Pritchard forecast the demise of the Euro on Monday, by Wednesday it has "soared"

AEP

Ambrose (did his parents not want a boy?) is spot on, as usual.

Markets ie GS and JPM et al, do the opposite ultra short term to what will happen. They want to clear out shorts or longs, they want to get themselves in the best possible position from which to place a huge trade etc

With the stock market having peaked this week, € has probably done so too. As someone else said its the end of the qtr too. This market (stocks and €) is going down. (How much? Well, in technical speak 'a lot'.)

$ to soar as flight to quality. c 80 was the floor not 72 as someone said.

Sell stocks today. Go short. You will not regret it - a repeated line from my post 2 days ago on another thread.

Edited September 23, 2010 by Killer Bunny

[Realistbear]

Why is it, that after Ambrose Evans Pritchard forecast the demise of the Euro on Monday, by Wednesday it has "soared" (in Daily Exprees parlance) by 2% against Sterling and Dollar. Even after the negative news vis a vis possible IMF intervention, collapse of Portugal and Ireland, General Strike in France etc etc. the Euro is going up and up. And it's not just Sterling weakness...Euro is up against everything. Does anyone know the rationale (if any). AEP

The Euro is rising on bad, er good, or is it bad, news? PMI down = Euro up

http://uk.finance.yahoo.com/news/euro-zone-pmis-show-slowing-growth-rising-optimism-poll-reuters_molt-f9ed84a569a5.html?x=0

[Guest_FaFa!_*]

The Euro is rising on bad, er good, or is it bad, news? PMI down = Euro up

http://uk.finance.yahoo.com/news/euro-zone-pmis-show-slowing-growth-rising-optimism-poll-reuters_molt-f9ed84a569a5.html?x=0

You are clearly looking at different charts to me. The first of the news came out at 8am this morning, since then EURUSD has started a sell off from 13400 down to 13330ish thus far. So actually PMI down = Euro down thus far (though I concede the point that market behaviour is not necessarily following the news as a general point). It will be interesting to see what level the EURUSD finds today and if it retests 13400.

[Toto deVeer]

Well lets look at where the most devoloped economies in the world are ... !

You may point and laugh at them, but look at the alternatives and you soon realise they're still worthy of investment.

I think you've got to draw the distinction between the real economy and the finance economy. On the basis of a real economy, then yes your contention has merit. On the basis of a finance economy, the e-zone is in real trouble.

[Ruffneck]

gold knows all

[Killer Bunny]

gold knows all

When the margin calls come gold will indeed tells us what it knows