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by Ashraf Laidi
Posted: Feb 20, 2010 5:00
Comments: 30765
Posted: Feb 20, 2010 5:00
Comments: 30765
Forum Topic:
EUR
Discuss EUR in this thread
if china not revaluate their currency(less than 5-10%), eurusd may drop to 1.25 by the year end or beginning of the next year.
If anything, the extension of the full allocation repos beyond year-end would depress EUR because it is a source of excess liquidity, or more liquidity than normally would have been available. That is not something that would be supportive of EUR strength from a supply-demand metric.
Sorry for the delayed response, but the answer is that the Fed does not have to. There is more than enough investor appetite, both domestic and foreign. The ECB has to buy garbage that few others would touch.
http://www.bloomberg.com/news/2010-09-17/international-buyers-increase-u-s-muni-bond-holdings-15-to-83-billion.html
The reason once again goes back to what I have been stating repeatedly, though in different hues. Foreigners have to redeploy their long USD back into the US in order to sterilize the appreciative effects on their own currencies. If they do not do this, then they must be prepared to redeploy those USD into other currencies or assets (USD denominated assets). But then that recipient nation must be willing to either absorb the US's deficit with that capital exporting nation or in turn reallocate that capital back into the USD via US Treasury or asset purchases in order to sterilize the impact on their own currencies. No one currently (or normally) wants to absorb another nation's deficit. With Europe being unable to sustain its deficit, the US is being leaned into even more heavily, hence the continued bid in UST and other US assets. We've already seen Japan's unwillingness to absorb the US's deficit with China after China decreased UST holdings and increased JPY and JGB purchases. No one wants to absorb that deficit. This is also why USD bears do not see the big picture. The world reserve currency, by its nature, must be provided in excessive supply to meet the world's demands. This necessary excessive supply along will bring many to question its soundness. If there is not ample supply of that world reserve currency, you will have deflation and depression resulting from what essentially is a destruction of money supply, a la what drove the downfall of gold as a currency or as a currency peg (limitations of physical supply in regards to its application towards both tangible and intangible value).
technically... minor support formed at 3380... break would see test of 3150(3100 max)... only break below 2585 confirms resumption of downtrend.... test of 3800/3900 level is more probable(at least technically) for now.. then lower but not necessarily resumption of downtrend...
hi ignore... how's it going?
And finally this fx market with large swings and low volumes cannot be traded technically.
Mark my words EUR is on parity with USD by year end and will drop already begin of october.
Yes indeed. Nothing to do with our moronic Mr Brown. Thank the lord he is now history :-)
Ashraf great leader for our forex fundamentals. No doubt about that one.