We finally see a nice sell-off in EURUSD at the start of the week. Perchance traders have had time to actually read the news and noticed the scary debt monters and super creeps lurking around.
A report in a Greek newspaper said that the government had approached the IMF/EU earlier this month about restructuring its debt, egged on by the US Treasury Secretary, no less. This was probably the reason for the drop in EURUSD before Greece came out to deny any such thing. So will they or will they not restructure? That's the million-dollar question. Markets are demanding ever higher yields for PIGS debt, so we'll have to see how long they can hold out.
Markets have also gradually pared down rate expectations for Europe and the UK, which seems reasonable given the over-optimism seen just a couple of weeks back, giving further fuel to USD gains this Monday. No charts needed here, we all know how toppish everything looks against the dollar, but at the same time we've seen the incredible penchant for dip buying that continues to frustrate anyone trying to pick a top . While we await BOE minutes on Wednesday, focus may shift to the unfolding debt horror we're witnessing instead of the more agreeable sport of pondering yield differentials.
Turning to the 'Most Happening Party in Town!' which took place over the past few days attended by the who's who of finance officials, we've decided to give an award to Guido Mantega, Brazil's Finance Minister.
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| Mantega with a suspiciously insulting gesture |
We loved his statement to the IMF, which, to us at least, seemed to reflect reality, something rarely seen from those in officialdom. We love it so much in fact, that we've included the link here so that you can enjoy this little bit of sobriety from one guy in an expensive suit:
An excerpt, if i may:
Equally worrisome are the risks associated with policies adopted by advanced countries that attempt to export their way out of difficult economic situations. Major reserve currency issuing countries continue to resort to ultra-expansionary monetary policies, the primary trigger of many of today’s economic woes. Excessive liquidity contributes to rapid credit expansion and asset price booms, as well as oil and other commodity price bubbles. Rises in oil and commodity prices increase the cost of living, especially for the poorest.
On the other hand, the World Bank meeting was mostly doom and gloom and we dislike such pessimissm so we'll leave you to go depress yourself over it.
So back to trading. Is it time to buy dollars by the truckload? We would if we were young and brash, but alas, we're old and would 'require confirmation', as any cautious analyst will tell you.
'Hmm. Control, control. You must learn control.'
- Yoda
Peace
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