Something's going on. I don't know what it is, but it just feels like something is going on. The big collapse in gold and metals overnight--which saw the CME halt trading, TWICE--seems like some kind of "canary in the coal mine" type of event.
The dollar is getting squeezed higher. It's been sort of relentless now for the past few weeks and it just seems to be intensifying.
I think the euro is getting ready to collapse. There is no, "harder to get" dynamic here, folks. Very shortly it seems like you're gonna be able to have all the euro you want, but NO ONE will want them that's the problem. (Or, bonanza, if you're short.)
Media coverage with respect to the euro has been quiet. Can you imagine the headlines when EURUSD breaks down below parity? (1:1.)
I think that's where it's going.
Everyone is getting ready for Shemitah in September. Get with it folks, it's every 7 years like clock work and this happening train is gonna crash with no survivors. The happening train leaves on the 13th and ends with blood moon so it going to a bloodbath for everyone who hasn't bailed. Are your seriously that far behind the times? Anonymous saying this saying this for almost a year now.
ReplyDeleteMartin Armstrong is calling October. :)
ReplyDeleteThe speculative short positioning in Euro was cut in half in the months after the big .35 swan dive/selloff that ended around march 15. The unwinding of those positions only helped Euro regain about .10 on its own. That told me that the shorts unwinding were never going to drive the price back to where it was, much less higher than it was initially as some prominent MMT economists claimed. Not even close in the short or medium term.
ReplyDeleteA falling currency doesn't always have a lasting boost the current account surplus as we've seen in the Euro Area, there was a quick initial burst in exports then they fell off. Also the absolute size of the current account surplus doesn't raise the value of the currency and squeeze out shorts. It does not happen that way. Usually the first derivative of the current account surplus causes/correlates/changes-with only a portion of the change in the value of the currency.
The current account surplus in the Euro area has been diminishing in recent months NOT rising as the currency bounced from its lows. There are many reasons not the least of which are highlighted by Franko here, European exporters have been cutting prices even with the Euro being at low levels while importers had to immediately pay increased prices. And then you have the capital side, Hundreds of multinational companies were offering new long term Euro denominated bond issues. EM borrowers were rotating out of USD debt and into Euro debt. And people were dumping money into European stock markets with borrowed Euros. Lots of moving pieces that I see and that isn't even the half of it.
." EM borrowers were rotating out of USD debt and into Euro debt."
ReplyDeleteRight this is what one would see if EZ entities were lowering prices in USD terms and US entities were raising prices in EUR terms... the trade is financed so EUR credit lines are increased while USD lines are decreased..
BUT these developments have other effects on existing lines already outstanding... the collateral value backing up existing lines is going down if merchants are lowering prices... banks have to adjust composition of assets/capital on their own (bank) balance sheets... eg US bank entities have to either increase reserves or capital in the face of falling value of financed import inventories .. imo this is where the "REAL" forex market occurs...
Its probably the gold sellers capitulating to low oil prices in USD terms finally... took a few months...
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