- The European Commission on Thursday authorised a temporary German plan to grant aid in the form of reduced interest rates on loans to businesses hit by the credit squeeze. (Reuters)
- The number of Americans collecting unemployment benefits jumped to 4.99 million two weeks ago. (Bloomberg)
"What the caterpillar calls the end, the rest of the world calls a butterfly."
FX Trading – Close but no cigar
The US$ Index tested its old high yesterday. The heightened bad news concerning the Eurozone banking system had dollar bulls (like us) looking for a breakout in Mr. Greenie. But, as they say, close but no cigar!
Traders have poured back into the euro today on news that Germany will spend more of its Treasury to support a union to which it is anchored. A couple of questions: 1) Does Germany have enough money to really make a difference given the huge EM banking and southern member fiscal exposure? 2) Will this make any taxpaying citizen of Germany happy?
Today, the market seems to be very happy with the plan….no news yet from German taxpayers.
EURUSD 240-min: Euro up sharply!
Surprising the faith in more of the same fiscal stimulus these big announcements generate, here and abroad. The amount of bad debt in the system overwhelms government coffers. The cold dark reality of debt repudiation is the light at the end of the tunnel in which we stare into, not traction from fiscal and monetary stimulus; we think.
But the reality is bouts of risk appetite can last as long as believers throw money—multi-day, multi-week, multi-month—who knows. We don’t!