EUR

I have a question to you currency experts:
Lets say some euro country needs a bailout, and the required currency is euro. How can IMF lend euro to anyone, as it doesn't have a mandate to print euro. I do know all IMF members (includung ECB) have some deposits @ IMF, but not nearly enough to shore up failing contries.
IMF *can* issue SDRs though. And it can maybe buy the euros needed in the market using those SDRs? How does this transaction acutally go down, as there is NO way for it to print euro.

EUR.USD running into serious resistanse here at 1.3660-80. Look at this area from march-apr 2010

Interesting comments from Ashraf today over US - China trade tariff issues seen earlier
" Readers of my book will find in detail how the Bush tariffs on Chinese and Brazilian steel manufacturers coincided with the top of the US dollar in 2002."

Agree with Catnip and co that there are many issues in Eurozone including austerity and greek default at some point of time.

But do consider the thunderstorm that the Dollar is facing

1- US taxes are going up on Jan 1, 2011 on the high earners who contribute 25% of comsumption.

2- US fiscal stimulus is dwindling out by first quarter 2011

3- US House is swinging back to republicans in the november election resulting in a deadlock between the US administration and the Congress - so no more fiscal easing, and only austerity can come out in the next couple of years in the US

4- US FED is terrified of Japan style deflation and is not ready to allow the economy to correct itself to its right size - all it wants to do is inflate inflate inflate. This is exactly what Greenspan and Bernanke did in 2002 - 2006. Having cut interest rates to zero, the next step is to directly buy Treasuries and put money in the hands of the banks.

The key questions are
- How much QE2 will be done
- When will it start and finish

One option for QE2 is big bang impact - anounce 500 billion to 1 trillion of asset purchases for the next six months for example. The other option is to annouce a program for monthly purchase of 50-100 billion and adjust buying until required.

If Fed starts QE2 now, it may favor the democrats before the november election. If the FED starts after november, it may find it too difficult to run this since the public seems to be running for austerity and small goverment spending mantra of the republicans. At the same time, Bernanke and co may want to hear what the public is voting for - So, somewhere around november or a bit earlier, tis QE2 will be clear.


The Dollar is falling since the QE2 annoucement is understood by the markets as a sign of panic by the FED. If QE2 is small and measured, the Dollar may stabilize.


I would not buy the Dollar until a clear annoucement on QE2 is made.

In the Eurozone, sovereign bond auctions, specially Spain, will go smoothly. The big event is Greek default but that may take a few years. Others, including Pakistan, Venzuela, Ukraine, Argentina etc are limping along so there is no reason why Greeks can also continue for a couple more years.

Dubai default is a special case. Dubai could not and would not default under the assumption that its big brother Abu Dhabi was always there with its trillions. However, the default happened just because the Abu Dhabi sheikh wanted to kick the butt of the Dubai sheikh.

Greek default will happen when the Germans think that the Euro is too expansive and it makes sense to bring it down via the Greek default - the Germans have it boh ways.

By the way, the long term solution to the US GDP is a dollar devaluation - Dollar index around 60 -70 is all it takes to get the US out of this mess. But this will only happen in a panic or in a long term QE3,4,5,6,7 etc in a Japan style printing press

i definitely get it... i was there exactly where you are right now 10 years ago.... and i've learned my lesson...
you will too... someday... but how soon depends on your ego... good luck catnip... :)

one more thing catnip....
even selecting the entry and exit point has to do with technicals....
big banks defintely play by technicals not merely by fundamentals fyi....