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Remember, the #Euro bounced on "whatever it takes" in 2012.
The risk being priced into the market was far beyond economic fundamentals.
What has changed since then except a lack of unity at the #ECB and what does that tell you about risk?
The risk being priced into the market was far beyond economic fundamentals.
What has changed since then except a lack of unity at the #ECB and what does that tell you about risk?
In other words, it will be continued deterioration of the union itself that drives the euro lower, not monetary policy actions.
In fact, monetary policy actions may have the opposite effect (supporting the currency).
In fact, monetary policy actions may have the opposite effect (supporting the currency).
This puts a very different perspective on latest #ECB actions.
The recent weakness would attributable to underwhelming actions rather than a dovish surprise.
So folks who are short the euro could be correct right now, but for the wrong reasons.
The recent weakness would attributable to underwhelming actions rather than a dovish surprise.
So folks who are short the euro could be correct right now, but for the wrong reasons.
Time to add to this thread given @RaoulGMI latest
EUR has two states of being:
State #1 - systemically ok, mon authorities have market confidence, success = weak EUR = ease financial conditions...
EUR has two states of being:
State #1 - systemically ok, mon authorities have market confidence, success = weak EUR = ease financial conditions...
State #2 - systemically dysfunctional, mon authorities losing market confidence, success = strong EUR ("whatever it takes")...
So, where are we now? I think State #2. So what does that imply about @RaoulGMI outlook? A weak EUR does not mean a big ECB move coming!
In fact it means the opposite. The ECB is impotent, and EUR weakness is driven by ECB dysfunction and Euro Area politics (Germany, Italy, France).
And it is a sign of poor financial conditions (loss of confidence in the system) not easing financial conditions.
And it is a sign of poor financial conditions (loss of confidence in the system) not easing financial conditions.
So from a trading perspective, you have to actually have faith in the ECB ("whatever it takes") to be long the EUR right now.
Or, you can be long political dysfunction and ECB impotence by being short EUR. This is what will drive the @RaoulGMI trend line to break. /done
Or, you can be long political dysfunction and ECB impotence by being short EUR. This is what will drive the @RaoulGMI trend line to break. /done
