EMERGENCY: OM NOM NOM: ECB to Intervene in Bond Market to Fight Euro Crisis
May 10th, 2010WARNING: This is not a recommendation to buy, sell or hold any financial instrument.
Why can’t the ECB just eat the debt, like the Federal Reserve has been eating it?
Does anyone know why not?
It doesn’t seem fair that Uncle Sugar can rally its silly confetti by feeding it into a shredder. The ECB should be able to do the same with its confetti, right?
—Many Possible Triggers for Wider Euro Debt Crisis
LOL. I love it.
OmNomNomNom
I was pretty sure that a bounce was coming, but I badly botched the timing. Now, on that post, dagobaz, who has been short EUR/USD since the 140s, left the following comment:
I am holding for parity on the eurusd, before the eoy.
That was back on 5 May.
This is from earlier today: AFP: Euro Could Reach Parity with Dollar: German Economist:
BERLIN — Battered by the Greek fiscal crisis, the euro could weaken to the point of parity with the US dollar, a top German economist said Sunday, as others warned of inflation in Europe’s biggest economy.
“As long as uncertainty over Greece and other countries on the periphery of the euro area continues, the euro will remain under pressure,” Thomas Mayer, chief economist at Deutsche Bank, told the Bild am Sonntag weekly.
“I think we could soon see 1.20 against the dollar and a further decline in the direction of parity is definitely possible,” added Mayer.
On Friday, as volatile markets closed for the week, the euro fetched 1.2755 dollars as investors warned that failure to nail down a credible rescue plan at Sunday’s meeting of EU finance ministers could pressure the euro even more.
Meanwhile, other economists warned of the dangers of inflation returning in Germany in the wake of the Greek crisis.
So, is it a dead cat bounce on the euro? Does the ECB action amount to spit balls? My official guess right here is that it’s too blurry to tell, but if you forced me to call it, here it is:
Now that the weekly support has been blown out, I’d say that a move to at least as low as EUR/USD 1.23 looks likely. My premise for long euro was based on a bounce with the weekly trend remaining in tact. We have a weekly red candle fully breaching that support and the bounce coming as a result of ECB manipulation.
EUR/USD Weekly Interval
Via: Bloomberg:
The European Central Bank said it will buy government and private bonds as part of an historic bid to stave off a sovereign-debt crisis that threatens to destroy the euro.
The ECB wants “to address severe tensions in certain market segments which are hampering the monetary policy transmission mechanism and thereby the effective conduct of monetary policy,” the central bank said in a statement today, minutes after European finance ministers announced a loan package worth almost $1 trillion to staunch the market turmoil.
The central bank said it will intervene in “those market segments which are dysfunctional,” signaling it views the recent surge in some of the region’s bond yields as unjustified. Policy makers are seeking to restore confidence in markets and protect the economy from a double-dip recession. The bank said the moves won’t affect monetary policy and the resulting liquidity will be reabsorbed.
Research Credit: tochigi
Whats the “best” fiat currency to be in? Dont laugh at the question I am serious. Assuming one has all the precious metals, food, water and other preps in place, which currency would one park some spare cash into? I know to avoid the Euro, Pound and Dollar. I was thinking the Swiss Franc…
SW: for my money, either the CAD, or the CH.
the swiss franc is almost always stable, and will decline less than other fiat currencies.
the canadian dollar is based on the idea that canada is an asset play.
hope this helps,
cybele