EUR will skyrocket this afternoon
- Thread starter filter
- Start date
Newbie here; this is my cherry post.
I've been short the EUR/USD since December, trading in and out some but mostly holding longer term. I see the EUR going to parity with the USD; the PIIGS (Portugal, Ireland, Italy, Greece, Spain) will continue to pull down the EUR.
The EUR has once again done a gap 'n crap; I'll be surprised if the EUR holds the gap gains through Tuesday's 1.2B EUR 26 & 52 week Greek auctions.
This loan guarantee of 45 Bil EUR isn't even enough to cover all of Greece's 2010 financing needs; they need 53 Bil EUR in 2010 - and I'd bet that 53 Bil is a conservative estimate. Link: http://www.reuters.com/article/idUSN1218974120100412
The money shot/quote: "Greece needs to borrow about 11 billion euros by the end of May to refinance maturing debt and interest charges. Its overall 2010 borrowing requirement is 53 billion euros."
The 45 Billion EUR package isn't a bazooka; it's a malfunctioning miniature water squirt pistol. And this squirt pistol is going to be arbed to death. Here's how: the Eurozone (EZ) basically guaranteed not only Greek, but also the rest of the PIIGS' debt (no fiscally irresponsible country left behind). The result will be a narrowing gap in debt spreads between EZ countries. So while the interest rate on PIIGS debt moves lower, it'll move French and German debt costs higher.
The bid-to-cover on Greece's 10 year auction was very close to a failed auction and it was only for 5 billion EUR. While I don't expect tomorrow's 26 & 52 week auctions to fail, I don't expect the bid to cover to be as large as what one would normally see on short duration auctions. To put the bid to cover in perspective, Greece's 26 week auction on 12 Jan had a bid to cover of 4.9 vice an average of 6.2 in 2009. If tomorrow's auction doesn't have a bid to cover above 5, that'll spell serious trouble for Greece - and with this loan guarantee, the rest of the Eurozone.
I've been short the EUR/USD since December, trading in and out some but mostly holding longer term. I see the EUR going to parity with the USD; the PIIGS (Portugal, Ireland, Italy, Greece, Spain) will continue to pull down the EUR.
The EUR has once again done a gap 'n crap; I'll be surprised if the EUR holds the gap gains through Tuesday's 1.2B EUR 26 & 52 week Greek auctions.
This loan guarantee of 45 Bil EUR isn't even enough to cover all of Greece's 2010 financing needs; they need 53 Bil EUR in 2010 - and I'd bet that 53 Bil is a conservative estimate. Link: http://www.reuters.com/article/idUSN1218974120100412
The money shot/quote: "Greece needs to borrow about 11 billion euros by the end of May to refinance maturing debt and interest charges. Its overall 2010 borrowing requirement is 53 billion euros."
The 45 Billion EUR package isn't a bazooka; it's a malfunctioning miniature water squirt pistol. And this squirt pistol is going to be arbed to death. Here's how: the Eurozone (EZ) basically guaranteed not only Greek, but also the rest of the PIIGS' debt (no fiscally irresponsible country left behind). The result will be a narrowing gap in debt spreads between EZ countries. So while the interest rate on PIIGS debt moves lower, it'll move French and German debt costs higher.
The bid-to-cover on Greece's 10 year auction was very close to a failed auction and it was only for 5 billion EUR. While I don't expect tomorrow's 26 & 52 week auctions to fail, I don't expect the bid to cover to be as large as what one would normally see on short duration auctions. To put the bid to cover in perspective, Greece's 26 week auction on 12 Jan had a bid to cover of 4.9 vice an average of 6.2 in 2009. If tomorrow's auction doesn't have a bid to cover above 5, that'll spell serious trouble for Greece - and with this loan guarantee, the rest of the Eurozone.
Well, after reading books on trade setups using technical analysis, I find it real difficult to try to add fundamental analysis into the mix because that's not my specialty. But, this is partly because in the last few weeks, we've had news going in every direction on the Eurozone and making it very difficult to determine a directional bias.
Anyway, when you mention the PIIGS, where or how does the UK fit into that? If they go down, I heard they're too big to bail out. So, what kind of impact would that have?
Come to think of it, who the hell with bail out Europe if they go down the drain?
Anyway, when you mention the PIIGS, where or how does the UK fit into that? If they go down, I heard they're too big to bail out. So, what kind of impact would that have?
Come to think of it, who the hell with bail out Europe if they go down the drain?
lol, I just read there might be a possible solution for Euro countries:
http://www.bloomberg.com/apps/news?pid=20601087&sid=a5Iiu3mIa2lE&pos=3
"every member state may have to give up some sovereignty on their public finances.â
I wonder if it would get to that point.
http://www.bloomberg.com/apps/news?pid=20601087&sid=a5Iiu3mIa2lE&pos=3
"every member state may have to give up some sovereignty on their public finances.â
I wonder if it would get to that point.
Clambill, thanks for the response. My Achilles heel in investing is that I'm NOT a technical trader; I go strictly off of fundamentals. Fundamentals works for me but doesn't work for everyone. 
As far as where the UK fits in, it is outside of the Eurozone (EZ). The EZ is EU countries which use the EUR; the UK uses the British Pound. I consider the British Pound in deep trouble also but not for the same reasons as the EUR. The advantage that the UK has is that they have the ability to print unlimited currency, which is not an option for EZ members.
In the end, I don't see Germany giving up any additional sovreignty to keep the EUR together. I've got a feeling that they've got contingency plans to go back to the DeutscheMark.
Here's the Greek Bond result: http://www.businessweek.com/news/20...ls-than-planned-as-aid-buttresses-demand.html
Bid to cover looks very good but that interest rate should have been MUCH lower on short term paper. It tells me that while spreads may be coming in a bit on long term paper compared to the German Bund, they continue to blow out on the short end of the yield curve. Not good because the short end's where Greece is going to find most of its financing.
This now turns into a kick the can down the road game for Greece. They can continue to roll paper short term but eventually that number gets too large and they have a failed auction of short term paper. I don't think that they'll be able to go with anything much longer than a year below 5%.
As far as where the UK fits in, it is outside of the Eurozone (EZ). The EZ is EU countries which use the EUR; the UK uses the British Pound. I consider the British Pound in deep trouble also but not for the same reasons as the EUR. The advantage that the UK has is that they have the ability to print unlimited currency, which is not an option for EZ members.
In the end, I don't see Germany giving up any additional sovreignty to keep the EUR together. I've got a feeling that they've got contingency plans to go back to the DeutscheMark.
Here's the Greek Bond result: http://www.businessweek.com/news/20...ls-than-planned-as-aid-buttresses-demand.html
Bid to cover looks very good but that interest rate should have been MUCH lower on short term paper. It tells me that while spreads may be coming in a bit on long term paper compared to the German Bund, they continue to blow out on the short end of the yield curve. Not good because the short end's where Greece is going to find most of its financing.
This now turns into a kick the can down the road game for Greece. They can continue to roll paper short term but eventually that number gets too large and they have a failed auction of short term paper. I don't think that they'll be able to go with anything much longer than a year below 5%.
I appreciate the fact you are posting opinions here. Anyway, what do you think of this? They said earlier on Bloomberg that traders were skeptical that Greece would ask the EU for aid now because they sold more bonds than anticipated.
This does not make sense to me because the loan guarantees are already out there. So, if they need it, they'd be able to get it.
This does not make sense to me because the loan guarantees are already out there. So, if they need it, they'd be able to get it.