Chinook's EUR/USD (E/$)Mumblings

00:13 EUR/USD: Approaching Levels That Entice Intervention Talk] Sydney,
November 26: Back in February when the EUR/USD was approaching 1.3000 there was
a lot of speculation in the European press that the 1.35 level would spur the
ECB into intervention mode. Articles in the UK Telegraph cited unnamed EZ
officials as indicating that a move to 1.35 would force the central bank into at
least considering action to stall the EUR/USD rise before it severely impeded EZ
growth prospects. There was an article in Reuters overnight by their Chief ECB
Correspondent Stella Dawson stating that monetary sources in Europe were
watching the EUR/USD climb extremely closely and "would welcome the opportunity
to put some two-way risk back into the market."
According to the report EZ central bank and finance ministry officials told
Reuters that the ECB would choose their timing carefully and jump into the
market when buyers looked overstretched and the market is ready for a turn. One
policy maker told Reuters: "ECB intervention is likely at some stage, but it has
to take the market by surprise in order to be effective." He went on to say the
possible intervention would be "tactical" and "well timed to deter the market
from believing that dollar selling is a one-way bet." The officials seemed to
imply that the levels weren"t as relevant as the speed of the move would be the
primary worry. The EUR/USD trades 1.3261/66.
 
I think they have to consider it (intervention). Lack of any response will continue the stampede. A stampede only ends when the herd reaches the end of the canyon. At that point it usually tramples the lead runners and holds.
 
Quote from trade-ya1:

My how trader sentiment has changed :)
More...
Hehe, but you have to admit it also was all over Bloomberg today, and also increasingly the last few days. I don't think it'll stop yet, since there has to be some fundamental incentive to start reversing for those brave souls out there. Gathering momentum - finally the market will reverse.

But since these forward looking free markets are biased on basis of the fundamental structural problems in the US, it will be difficult to change overall sentiments without proper signals to fix the structural problems.
The problems were created by politicians, and have to be fixed by politicians, becuase markets don't regulate social issues, government budgets and fiscal policy - although the FOMC moves where it thinks markets and the economy will benefit - albeit late.

With Bush behaving like a socialist - increasing government spending, and hindering free trade with trade barriers to protect their internal market - the danger is that he is trying to regulate too much, in my opinion. He thinks he can do it all - but it's the markets who will do it - and they're forward looking. Increasing spending to spur growth is totally whacked in my view - and the typical socialist solution.
Bush has no timeline for fixing the deficits, nor reduce spending - he continues to increas it. US consumers are also closing in on dangerous pressure - and if rates increase rapidly - they could become caught.

We traders in the market - will only have the bias of where we think the trend is moving us. For now it's increasingly focusing on part of structural problems in the US and that doesn't look like it will change any time soon - no matter who is running the show in the Whitehouse for the moment. This is problematic for world economic growth in the long run - and if central banks start to follow the Russians with similar remarks then we could see a very fast acceleration. Then the special status of the USD since the introduction of the IMF after WW1, could be in for a fundamental change.

Maybe we would be better off with the Bancor after all. It's no fun for world economy and taxpayers to bear the brunt of the US politician made problems. Time to get some real capitalists in there.
 
We're so close 1.33 - so it's the natural way of the market. Try it - if it doesn't succeed we reverse for a little - taking all the winners we get. Then a new wave of attempts. The stuff is self-sufficient in it's trend.

I see Thomson note some profit-taking on the EURUSD and a change to a "bid tone", but I frankly can't see that - and no reason to anyways. As long as there are no signals of otherwise we will run till we hit the wall - of sorts.

In Japan they also just repeat the rhetoric, but probably would like to see the best possible moment if rhetoric does not seem to work. But in the USDJPY case it seems to dampen JPY rise somewhat - unlike the EUR rise which is in the total control of the markets right now - disregarding fundamentals on the numbers - but seeing the structural problems continuing - and thus supporting the trend.

A more firm stance on fx stability could have retraced us a little - but as long as this is lacking any substance - who is going to believe it ? :)

Noone would like to be on the opposite side of this trend going at this pace. Like Neal said, it's time to close the year on a up note.
:D
 
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