EURUSD 1.1851 |
USDJPY 111.52 |
GBPUSD 1.3772 |
AUDUSD 0.7485 |
USDCAD 1.2406 |
GBPJPY 153.59 |
EURJPY 132.15 |
AUDJPY 83.48 |
CADJPY 89.86 |
Silver 26.23 |
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Fitch is behind the curve
my two cents on Eonia - Euribor
the rise in Eonia can be traced from the June 7 date - when the reversal in the Euro happened
As the Euro is increasing, the demand for the Euro is increasing (bubble formation), resulting in rising in Eonia. So, it is not the lack of supply, it is the rising demand for the Euro from Hedge funds and Central Banks that is causing this rise.
When (whenever) Euro falls across months, Eonia will decrease.
So, in a way Ashraf is correct and we should not consider this rise as an indicator of tighetened money lending.
In my view, Euro rise since June 7 started due to the Chinease buying into spanish bonds that ultimately suggested no imminent spanish default resulting in overall improving the sentiment towards the Euro. The 2nd major event has been Bernanke's reversal on QE2 that has taken out the floor from the Dollar. The 3rd event is the Japanease intervention that is resulting in asset allocation out of the Dollar and into the Euro.
This money printing is not sustainable and a peak in Euro should occur with a sharp crisis in Eurozone sometime early next year. For the next 2-3 months, I would not worry too much about the Eurozone. Greece and Spain are covered for now.
Don't Confound Inadequate Liquidity with Unnecessary Liquidity
Many have wrongly stated that rising EURIBOR rates (Eurozone interbank rate) as a sign of inadequate liquidity, which is a sign of lack of confidence. But they confuse rising EUR interbank rates -- resulting from inadequate liquidity due to lack of lending & trust among banks, with rising EURIBOR – usually associated with lack of need of funds (the case today after Eurozone banks demanded less loans from ECB).
well well....if no funding is required but unlimited funding is offered the EURIBOR goes up ( btw
this is one of the facts I did not concur with EUR "strength") . EURIBOR has been rising day by day after Lehman bankruptcy. Not a single month of downmove.
No in that case EURIBOR will go down. The interpretation is correct. Rising EURIBOR indicates
lack of liquidity not surplus of liquidity.
The combination of EURIBOR and EONIA has only recently led some banks to warn of an EUR crash.
They are correct imo.
Fact is the total of eurozone economy is in worst shape than US economy.
you cannot imagine what you cannot see or what you do not know- a black swan coming?
my current milestones on a fundamental basis are the October jobs report and the Nov 2-3 FED meeting.
If the jobs report is too good, then Dollar could rally, and QE2 may be considered a bluff. If the jobs report is bad or ok, dollar should fall with imminent QE2.
For now, all indications are that the FED would annouce QE in the range of 500 billion in the november meeting.
If these two milestones are met, there is no cover for the dollar and it would go above 1.5 before december jobs report.
The month of december should be a reversal month for the Dollar accompanied by Euro losses triggered by a weakening Euro economy.
I intend to sell the Euro before the december jobs report.
For now, I would only be short Dollar.
There can be any catastrophic event from now to december that could trigger a strong Yen and Dollar rally. Minus such an event, the Dollar is poised for a sharp dip - tighten your seat belts.
Overall, Dollar Index below 70 for a year would be great for the Dollar. It shorely will tip the Eurozone into a sharp recession but who cares.
many are asking me questions on Twitter.com/alaidi about what US investors should do.
http://twitter.com/alaidi
Ashraf