Lucas Papademos, named today to be interim prime minister of Greece, steered the country into the euro region as central bank governor more than a decade ago. Now the former European Central Bank vice president will have to secure the country’s euro membership for a second time.
Papademos, who has never held elected office, helped foster economic growth rates that surpassed Germany’s and France’s in his eight years at Greece’s central bank before moving to the ECB in 2002.
People are now moving euro-denominated deposits out of Greece, Portugal and even Italy in protection against a possible exit of these countries from the European Monetary Union…….What is the effect of the movement of deposits? The banks losing their deposits will soon be facing a liquidity crisis. A publicly understood liquidity crisis leads to bank failures. In short, the focus on political considerations misses the looming problem of a liquidity crisis and bank failures.
via Watch Europe’s Bank Deposits, Not Its Political Moves – Seeking Alpha.
The Aussie broke short-term support at $1.02, signaling a test of parity. The descending 63-day Twiggs Momentum “iceberg” warns of a primary down-trend. Breach of parity would indicate another visit to primary support at $0.94. In the long-term, failure of primary support would offer a target of $0.80*.
* Target calculation: 0.94 – ( 1.08 – 0.94 ) = 0.80
Canada’s Loonie “peeked” briefly above parity before retreating to test support at $0.975/0.980. Descending 63-day Twiggs Momentum, below zero, indicates a primary down-trend. Breach of support would test $0.94; and failure of primary support at $0.94 would offer a target of $0.88*.
* Target calculation: 0.94 – ( 1.00 – 0.94 ) = 0.88
EURUSD broke through $1.36 warning of another test of primary support at $1.32. Respect of the zero line by 63-day Twiggs Momentum confirms a primary down-trend. Failure of support would offer a target of $1.22*.
* Target calculation: 1.32 – ( 1.42 – 1.32 ) = 1.22
GBPUSD is being dragged lower by the euro. Reversal below $1.60 warns of another test of primary support at $1.53 — as does 63-day Twiggs Momentum respect of the zero line. Failure of support would offer a target of $1.46*.
* Target calculation: 1.53 – ( 1.60 – 1.53 ) = 1.46
The strengthening dollar should see commodities weaken. Reversal below 315 would indicate respect of the descending trendline — and another test of primary support at 295. Breakout is unlikely, despite the rise of crude oil, but would indicate that the down-trend is weakening.
* Target calculation: 295 – ( 325 – 295 ) = 265
Brent Crude broke through its upper trend channel despite the strengthening dollar (one would normally expect prices to fall). The down-trend is losing momentum and (Brent) crude is likely to form a base above $100/barrel.
Spot gold is testing short-term support at $1750/ounce as the greenback strengthens. Breach of the rising trendline would suggest that the advance is losing momentum — and breakout below $1700 would signal another test of primary support at $1600. Respect of $1700 is less likely, but would signal an advance to $1900.
* Target calculation: 1800 + ( 1800 – 1700 ) = 1900
The Dollar Index is headed for another test of resistance at 80 on the strength of the euro crisis. Respect of the zero line by 63-day Twiggs Momentum suggests a primary up-trend. Breakout above 80 on the index (or 5% on TMO) would confirm, offering a medium-term target of 85*.
* Target calculation: 80 + ( 80 – 75 ) = 85
Moody’s rating agency changed its credit rating outlook from stable to negative for South Africa Wednesday, expressing concerns that politicians overseeing the continent’s largest economy won’t be able to stick to strict fiscal policies.
Moody’s has said it fears commitment to low budget deficits could be undermined by pressure from factions of the governing African National Congress party, its labor movement supporters and a population facing high rates of poverty and unemployment. The agency also said a debate driven by the party’s popular youth leader over whether mines should be nationalized is scaring investors.
Having followed the German political scene closely for the last five months, it is clear to me that almost the entire German political establishment is out of its depth, ideological, sometimes smug, apt to view the EMU debt-crisis as a Calvinist morality tale, and lacking in deep understanding of what it has got itself into.
One can understand German worries about money printing – and especially the loss of fiscal sovereignty and democratic control – but matters have already moved on. It is too late for that.
via America and China must crush Germany into submission – Telegraph Blogs.
