EUR 04 (Nov 10 - Jan 12)

[winston]

Hmmm..... EUR @ 133.62 now. Maybe things dont drop in a straight line.

[winston]

John Taylor Sees Tuesday As D-Day For European Currencies, Says America Is Headed For New Recession by Tyler Durden

Bank Run European Central Bank Eurozone Germany Greece Ireland Italy Portugal Recession recovery Reuters Swiss Franc

John Taylor appeared earlier on the 2011 Reuters Investment Outlook Summit, and among various interesting things (namely another call for EUR-USD parity, and that he would "love to be owning gold right here"), he said that the US is imminently headed for another recession, a development that will boost the USD and weigh on commodities.

Yet what is more interesting is that in his latest "Chairman's View", Taylor put down a specific date for the end of the recent recovery in European currencies: the date is tomorrow, the day of the Irish Budget decision, and also the day when Europe may see a coordinated effort for a bank run.

Taylor also notes that "the narrowing of credit spreads between these countries and Germany is unlikely to persist for very long without further action by the European leaders." Hopefully the Eurozone meeting taking place right now will result in something more than just more hot air.

For those who trade FX, Euro sov bonds, or are just generally interested in the views of the manager of the world's biggest FX hedge fund, we recreate his latest thoughts below.

The Recovery in the European Currencies Should End Tuesday
By John R Taylor/Jonathan Clark

The market took the European currencies strongly higher on Friday and used the weak US employment data as an excuse. The cycles were already calling for the recovery to last into Tuesday, although we didn’t expect the strength seen on Friday. In the near term the strength of the European currencies makes sense as it impacted the interest rate differential between Germany and the US.

http://www.zerohedge.com/article/john-t ... -recession?

[winston]

Why You Don’t Want to Hold Euros in 2011 by Karim Rahemtulla

It’s obvious that Europe’s litany of deficit-born woes have hit the single currency. But the surprising thing is that the problems haven’t dented the euro as much as they should have. In other words, the euro should be trading a lot lower today than it is.

Consider the fact that after bailing out Greece and Ireland, in addition to the previous stimulus and bank bailout packages, it’s cost Europe close to one trillion euros. So with many more euros printed, it’s quite surprising that the euro’s only down around 15%. Moreover, most of that decline occurred during the first quarter of 2010… even though the rate of printing increased as the year went on.

How can this be possible? And what are the next twists and turns for the European rollercoaster in 2011?
Thanks, Uncle Sam

The only logical conclusion for the euro’s failure to disintegrate lies at the feet of the U.S. dollar.

If this were just a self-contained euro crisis, the currency should have – and would have – fallen off a cliff. But since this is a global crisis in a global economy, the euro is falling… but at a diminished rate, due to the fact that the monetary authorities have printed just as many dollars.

However, this trend might not continue in 2011 and the euro’s slide may resume, which would take the currency to new lows.

Not Just One Shoe to Drop in 2011… But Two

If you had just one word to define the economic climate over the past couple of years, “bailout” would probably rank very near the top.

Hot on the heels of the banks, auto companies, Greece and Ireland, we’re likely to see two more next year – Spain and Portugal. Why?

Simple. Both countries are suffering from:
•A weak business climate,
•High unemployment,
•And a failed real estate sector.

Just last week, Standard & Poor’s downgraded Spain’s debt rating, promptly sending shivers down the spine of an already nervous Spanish central bank.

Still, the fact that most observers have now resolved that Spain and Portugal will be next on the bailout list should mitigate some of the euro’s downward action.

What people don’t know, however, is the size of the impending bailout. That will determine the fate of the euro in the near-term.

As for the fifth member of the PIIGS that I haven’t mentioned so far – Italy – it’s not likely to require a bailout, as it didn’t participate in the same real estate bubble markets of Spain or Portugal.

The Eurozone: All Alone in the Printing Room

Another bearish force for the euro is the situation here in the United States.

In 2011, the U.S. dollar may relinquish its position as the Cincinnati Bengals of the currency world. Early indications are that the U.S. economy may post stronger than expected growth in 2011, which would lessen the need for an additional stimulus. In addition, there’s a small chance that we’ll see more U.S. government austerity plans, given the promises made in the recent elections.

If these scenarios play out, the eurozone might find itself as the only major currency printer left.

Germany May Want Strength… But it Likes Weakness
Remember, though, that it’s in the eurozone’s best interest to have a low euro currency, regardless of what the talking heads from the European Union say publicly. (Similar to what U.S. officials say about advocating a “strong dollar policy” when the truth is far from that.)

For example, German factories are currently humming away at capacity, as the low euro drives exports higher. You can bet the Germans will talk tough, but have you seen them do anything about the euro’s slide?

Germany is in the best and worst position when it comes to the euro.
•On one hand, as the strongest nation in the eurozone, it’s suffering the greatest currency debasement.
•But as its biggest exporter, it’s also reaping the greatest benefits of a low euro, too.
Talk about a Catch 22.

But regardless of what you hear about the euro’s imminent break-up, it’s not going to happen. Why?

Goodbye to the Euro? Nein!
Simply put, Germany won’t allow it.

Yes, you heard right. Regardless of the rhetoric coming out of Germany (which has been the loudest), the country isn’t going to back a dismantling of the euro. And while some have estimated that the stand-alone Deutschemark would be worth twice the euro – and most of the euro member currencies (except for the Dutch Guilder) – if Germany were to leave the union, it would plunge the country into a quick and major recession, as its goods and services would be uncompetitive in the region where it trades the most.

The bottom line is that the euro isn’t going to disappear in 2011… or anytime soon, in fact. But it should be worth less in 2011.

My target for the euro in 2011 is 1.15 euros to the U.S. dollar. Based on purchasing power parity, it should be even lower, but as we saw in 2010, while the euro did plunge below $1.20, it recovered as America cranked up the printing presses. 2011 may not be as kind to those holding euros.

http://www.investmentu.com/2010/Decembe ... -2011.html

[winston]

JOHN TAYLOR: THE EURO COULD FALL BELOW DOLLAR PARITY IN 2011

John Taylor, chief executive officer of FX Concepts LLC, the world’s largest currency hedge fund explains why he is very bearish on the Euro and believes it will decline below parity with the dollar.

Taylor says the market is still overly optimistic on the Euro crisis and believes we’re still likely to see defaults and defections from the Euro:

http://pragcap.com/john-taylor-the-euro ... ty-in-2011

[winston]

The Falling Euro May Offer The Best Investment OPPORTUNITY In 2011 By Bryan Rich

Will 2011 Be the Year the Euro Collapses?

The challenges ahead for the euro zone suggest that it will.

Investors may think a euro collapse is strictly a risk to their investments. But the fallout in Europe could also offer the biggest investment opportunity in 2011. Either way, the events as they unfold command attention and respect.

You could consider shorting the CurrencyShares Euro Trust (FXE: 128.59 -1.05 -0.81%), or buy the ProShares UltraShort Euro (EUO: 21.73 +0.32 +1.49%), an ETF designed to rise 2 percent for every 1 percent decline in the euro.

http://www.dailymarkets.com/forex/2011/ ... y-in-2011/

[kennynah]

my bet is for euro to stay above 1.31 against the USD in the next 3 months....

nothing to substantiate my conjecture...just my "feel"

[winston]

THE EURO JUST BLEW THROUGH AN IMPORTANT LEVEL

Beware of the euro… the important paper currency just violated a big number…

DailyWealth sees paper currencies like the dollar and euro as rough "stock prices" of countries or economic unions. Generally speaking, if a country manages its finances well and engages in productive behavior, its currency appreciates over the long term.

If a country runs its finances like a drug addict and racks up crazy debts, its currency depreciates over the long term.

Most smart analysts put the status of the European Union's balance sheet in the "drug addict" category. In order to pay for all sorts of bailouts and handouts, nations like Greece, Ireland, Portugal, and Spain have run up impossible debts.

Bond and stock prices are plummeting in those nations as they struggle to pay them back. Bank stocks in Portugal, for instance, just struck 15-year lows.

All this is hard on the paper currency backing the mess, the euro. As you can see from the chart below, the euro enjoyed a rally in late 2010 as folks got to thinking things were great. But in the past few months, the euro got clobbered… and just last week, declined past $1.30 to reach an important new low.

The race to the lower right-hand side of the chart is on…

www.dailywealth.com

[winston]

EUR at 1.3363 and all the parrots were calling for 1.20 and even parity ..

[winston]

EUR @ 1.3464. Stronger than expected. Wonder how many people got slaughtered this time ?

[winston]

Gartman: Rally in Euro To Be Short Lived

The euro [EUR=X 1.3617 0.0006 (+0.04%) ] hit a 2 month high Friday on stronger than expected data out of Germany and as Spain made plans to bail out its banks.

Considering the recent gains, is it time to put that bear costume back in the closet?

Not according to strategic investor Dennis Gartman, author of the Gartman Letter.

He’s negative on the euro and despite the rally he remains negative.

”A year ago the euro was trading about 1.6 to the dollar and now it’s trading 1.36. In the scheme of things is the euro demonstrably lower than where it was 6 months ago – even 4 months ago? Yes.”

And Gartman expects that longer-term trend -- from the upper left to the lower right -- to continue.

”Have the fundamental issues facing Europe – the philosophical problems, the productivity problems, the problems with the banks – have those problems gone away? Not at all.”

But don’t run out and establish a short position right now.

”When I trade the euro I will be a seller,” Gartman says, “but I won’t sell until the market tells me I should.

Of course that begs the question, when will he sell?

When the euro rolls over and declines again, he explains. In other words he'll wait for a momentum shift. "And I think that it shall decline again

http://www.cnbc.com/id/41194225