Category: UK & Europe

Posted on

Europe’s Economic Suicide – NYTimes.com

Paul Krugman: If European leaders really wanted to save the euro they would be looking for an alternative course. And the shape of such an alternative is actually fairly clear. The Continent needs more expansionary monetary policies, in the form of a willingness — an announced willingness — on the part of the European Central Bank to accept somewhat higher inflation; it needs more expansionary fiscal policies, in the form of budgets in Germany that offset austerity in Spain and other troubled nations around the Continent’s periphery, rather than reinforcing it. Even with such policies, the peripheral nations would face years of hard times. But at least there would be some hope of recovery.

What we’re actually seeing, however, is complete inflexibility. In March, European leaders signed a fiscal pact that in effect locks in fiscal austerity as the response to any and all problems. Meanwhile, key officials at the central bank are making a point of emphasizing the bank’s willingness to raise rates at the slightest hint of higher inflation.

via Europe’s Economic Suicide – NYTimes.com.

Posted on

UK & Europe: Madrid in trouble

The monthly chart of the Madrid General Index highlights the extent of Spain’s problems, with the index breaking support at 750 and headed for its 2009 low of 700. A 63-day Twiggs Momentum peak below the zero line warns of a strong down-trend. Failure of 700 would signal a decline to 600*.

Madrid General Index

* Target calculation: 750 – ( 900 – 750 ) = 600

The broader Dow Jones Europe Index is undergoing a correction on the weekly chart. The sharp fall on 13-week Twiggs Money Flow warns of selling pressure. Failure of medium-term support at 240 is likely and would suggest another test of primary support at 210. Respect of support is unlikely but would indicate that the primary up-trend is intact.

Dow Jones Europe Index

The FTSE 100 is testing support at 5600. Respect would confirm the primary up-trend, indicating an advance to 6400*.
A 13-week Twiggs Money Flow trough above the zero line would signal continued buying pressure. Failure of support, however, would warn that the up-trend is weakening.

FTSE 100 Index

* Target calculation: 6000 + ( 6000 – 5600 ) = 6400

Posted on

Forex: Euro, Pound Sterling and Yen

The Euro is again testing support at $1.30. The short weekly candle at the support level warns of a downward breakout to test primary support at $1.26. A 63-day Twiggs Momentum peak below zero would suggest continuation of the primary down-trend. In the long term, failure of $1.26 would signal a decline to $1.18*.

Euro

* Target calculation: 1.26 – ( 1.34 – 1.26 ) = 1.18

Pound Sterling ran into resistance at $1.60 and failure of short-term support at $1.58 would test $1.56. Recovery of 63-day Twiggs Momentum above zero suggests reversal to a primary up-trend; but this would only be confirmed by breach of resistance at $1.62.

Pound Sterling

The US Dollar is correcting against the Japanese Yen, headed for a test of support at ¥80. Respect would indicate a primary up-trend; confirmed if resistance at ¥84 is broken. A 63-day Twiggs Momentum trough above zero would strengthen the signal.

Japanese Yen

* Target calculation: 85 + ( 85 – 80 ) = 90

Posted on

"The Big Easing" by Daniel Gros | Project Syndicate

The banks that are parking their money [about €1 trillion] at the ECB receiving only 0.25% interest are clearly not the same ones that are taking out three-year loans [€1.15 trillion] at 1%. The deposits come largely from northern European banks mainly German and Dutch, and LTRO loans go largely to banks in southern Europe mainly Italy and Spain. In other words, the ECB has become the central counterparty to a banking system that is de facto segmented along national lines. The real problem for the ECB is that it is not properly insured against the credit risk that it is taking on. The 0.75% spread between deposit and lending rates yielding €7.5 billion per year does not provide much of a cushion against the losses that are looming in Greece, where the ECB has €130 billion at stake.

via “The Big Easing” by Daniel Gros | Project Syndicate.

Posted on

Forex: Euro, Pound Sterling & Yen

The Euro continues in a primary down-trend, with 63-day Twiggs Momentum respecting the zero line from below. Failure of medium-term support at $1.30 would indicate another test of primary support at $1.26. And breach of $1.26 would warn of a decline to $1.18*.

Euro/USD

* Target calculation: 1.26 – ( 1.34 – 1.26 ) = 1.18

The rise above zero on 63-day Twiggs Momentum suggests that Pound Sterling commenced a primary up-trend. But respect of resistance at $1.60 indicates another test of $1.56. Respect of $1.56 would signal another advance, while failure would warn of a primary decline with a target of $1.46*.

Pound Sterling/USD

* Target calculation: 1.53 – ( 1.60 – 1.53 ) = 1.46

The Greenback is retracing against the Japanese Yen after a strong rally. A short correction is likely and would signal another strong advance; breakout above ¥84 would offer a target of ¥88*. Respect of zero by 63-day Twiggs Momentum would confirm the primary up-trend.

Japanese Yen

* Target calculation: 84 + ( 84 – 80 ) = 88

Posted on

UK & Europe correction

Dow Jones Europe Index respected resistance at 260, suggesting another correction. Declining 13-week Twiggs Money Flow indicates medium-term selling pressure; but a trough that respects the zero line would signal a primary up-trend. Respect of support at 240 would also suggest an up-trend.

Dow Jones Europe Index

* Target calculation: 260 + ( 260 – 210 ) = 310

The FTSE 100 is headed for a test of support at 5600. Respect of support would confirm the primary up-trend, as would a 13-week Twiggs Money Flow trough above zero.

FTSE 100 Index

* Target calculation: 5500 + ( 5700 – 5100 ) = 6300

Posted on

Forex: Euro, Pound & Yen

The Euro is headed for another test of resistance at $1.35. Breakout would signal an initial advance to $1.40. Recovery of 63-day Twiggs Momentum above zero would signal a primary up-trend.

EUR/USD

* Target calculation: 1.35 + ( 1.35 – 1.30 ) = 1.40

Pound Sterling displays a similar pattern, testing resistance at $1.60. Recovery of 63-day Twiggs Momentum above zero signals a primary up-trend. Initial target for the breakout would be $1.64.

GBP/USD

* Target calculation: 1.60 + ( 1.60 – 1.56 ) = 1.64

The Greenback  is retracing against the Japanese Yen, testing medium-term support at ¥82. A short retracement is likely and respect of support at ¥82 would signal another strong advance.

USD/JPY

* Target calculation: 84 + ( 84 – 82 ) = 86

Posted on

Budget 2012: George Osborne averts a slow national rot – Telegraph Blogs

Ambrose Evans-Pritchard: The underlying ghastliness of the British predicament remains. [Government] Spending as a share of GDP has ratcheted up from 35pc at the end of the 1990s to the Brownian peak of 51.7pc in 2009 (Eurostat), an all-time high in peace-time. It came back slightly to 50.4pc in 2010.

This debacle happened over a decade when a string of countries were slimming down the Leviathan state. Germany and Holland are now leaner than Britain.

Eurostat’s total government spending as a share of GDP for 2010 (the latest available) shows:

France 56.6
Sweden 52.7
UK 50.4
Italy 50.3
Germany 47.9
Norway 45.8
Switzerland 34.2

The US, Japan, Canada, and Korea are all much lower, and China is much lower yet.

This state burden is the macro-economic killer. It is a far more relevant than the tax take as a share of the economy, since it includes borrowing (ie deferred taxation).

via Budget 2012: George Osborne averts a slow national rot – Telegraph Blogs.

Posted on

Europe hesitates

Dow Jones Europe Index retreated below 260, indicating a correction to test support at 247. Respect would indicate a healthy up-trend, while a fall below 240 would signal reversal. Rising 13-week Twiggs Money Flow indicates long-term buying pressure, suggesting continuation of the up-trend.

Dow Jones Europe Index

* Target calculation: 260 + ( 260 – 210 ) = 310

The FTSE 100 is also retracing to test support, at 5600. Rising 13-week Twiggs Money Flow indicates long-term buying pressure. Respect of the long-term trendline would signal continuation of the primary up-trend.

FTSE 100 Index

* Target calculation: 5700 + ( 5700 – 5100 ) = 6300

Posted on

Forex: Euro, Pound & Yen

The Euro is undecided about its recent show of strength and is likely to re-test medium-term support at $1.30. Failure of $1.30 would complete a head and shoulders pattern, visible on the Daily chart (shoulders at $1.33), testing primary support at $1.26. But recovery above $1.33 remains as likely and would signal another test of $1.35.

Euro/USD

Pound Sterling is testing resistance at $1.60 and recovery of 63-day Twiggs Momentum above zero would indicate a primary up-trend. Confirmation would only come, however, from breakout above $1.62.

Pound Sterling/USD

The Greenback is retracing to find support after a strong advance against the Yen over the last 6 weeks. Respect of support at ¥80 would confirm a healthy primary up-trend.

USD/Japanese Yen

* Target calculation: 80 + ( 80 – 75 ) = 85

Powered by WordPress / WordPress Maintenance Service By Website Helper