Concerns about its European trading partner dragged the Pound lower against the greenback. Target for the initial primary decline is $1.53*.
* Target calculation: 1.59 – ( 1.65 – 1.59 ) = 1.53
The Swiss Franc is now headed for a test of parity against the greenback, dragged lower by its peg at €1.20.
* Target calculation: 1.20 – ( 1.40 – 1.20 ) = 1.00
The euro is outstripping the dollar in their race to the bottom. Having respected resistance at $1.40, breakout below $1.35 would signal a test of the next major support level at $1.30*. The 63-day Momentum peak below zero confirms a strong down-trend.
* Target calculation: 1.40 – ( 1.50 – 1.40 ) = 1.30
The risks ahead are not just of a mild double-dip recession, but of a severe contraction that could turn into Great Depression II, especially if the eurozone crisis becomes disorderly and leads to a global financial meltdown. Wrong-headed policies during the first Great Depression led to trade and currency wars, disorderly debt defaults, deflation, rising income and wealth inequality, poverty, desperation, and social and political instability that eventually led to the rise of authoritarian regimes and World War II. The best way to avoid the risk of repeating such a sequence is bold and aggressive global policy action now.
via How to Prevent a Depression – Nouriel Roubini – Project Syndicate.
The German public still thinks that it has a choice about whether to support the euro or to abandon it. That is a mistake. The euro exists and the assets and liabilities of the financial system are so intermingled on the basis of a common currency that a breakdown of the euro would cause a meltdown beyond the capacity of the authorities to contain. The longer it takes for the German public to realize this, the heavier the price they and the rest of the world will have to pay.
via Does the Euro Have a Future? by George Soros | The New York Review of Books.
The pound, affected by euro fallout, broke support at $1.59 to signal a primary down-trend. Expect a test of its December 2010 low at $1.53*
* Target calculation: 1.60 – ( 1.67 – 1.60 ) = 1.53
The euro found short-term support at $1.35 against the greenback but is now weakening. Failure of support would confirm the target of $1.30*. A peak below zero on the 63-day Momentum oscillator would confirm the primary down-trend.
* Target calculation: 1.40 – ( 1.50 – 1.40 ) = 1.30
“China is a poor country with only $4,000 per capita income,” Yu Yongding, a Chinese top economist and former member of the central bank’s monetary policy committee said in an interview in China. “To talk and think about China to rescue countries with $40,000 per capita incomes is ridiculous.”
China is ready to help, Mr. Yu said, “but European countries first should show that they have a clear road map and convincing policies to preserve the euro and solve their problems as well as the political will to make necessary sacrifices.”
via Europe Is Urged to Take Bolder Action on Debt – NYTimes.com.
Greece will run out of money within weeks if it can’t end a standoff with the International Monetary Fund and the EU. In a last-ditch effort to overcome the impasse with its international lenders, Greece’s government said Sunday that it would impose a new property tax to cover a €2 billion shortfall in budget targets this year. Investors worry that if the dispute goes unresolved, Greece could suffer a messy default, with untold consequences for Europe’s banks.
French banks’ overall exposure to Greece is about €65 billion, according to the Bank of International Settlements.
Europe doesn’t have months, much less years, to resolve its crisis. At this point, it has only days to avert the worst. It is critical that leaders distinguish what must be done now from what can be left for later.
The first urgent task is for Europe to bulletproof its banks. Doubts about their stability are at the center of the storm. It is no coincidence that bank stocks were hit hardest in the recent financial crash.
via Europe on the Verge of a Political Breakdown – Barry Eichengreen – Project Syndicate.
The euro broke support at $1.40 after a descending triangle lasting several months. Breakout was most likely precipitated by the resignation of Jurgen Stark from the ECB. Target for the breakout is $1.30*.
* Target calculation: 1.40 – ( 1.50 – 1.40 ) = 1.30
