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’Greek funny money
Greece is not printing its own money already. No drachmas are being issued by Greece, nor is there monetisation of public debt. However….
And with that rather tantalising intro — Stephane Deo of UBS blows the lid off something we’ve been wondering about Greece for a while.
The currency pair league table
$/€ races ahead of $/£, $/¥ and $/SFr, but $/AUD has made a strong run from behind…
Actually, the thing that jumps out from Table 4 of the most recent FX trading survey from London’s Foreign Exchange Joint Standing Committee is that none of the columns — April 2011 thru October 2011 — are ranked consecutively.
Breaking up is hard to do — but here goes, anyway
From Jonathan Tepper, economist, chief editor of Variant Perception and co-author with John Mauldin of Endgame: The End of the Debt Supercyle…
A thirteen point guide to breaking up the euro.
Those countries that opt to remain in the euro will,
SocGen: hedgies short euro against dollar “like never before”
A chart from SocGen’s latest Hedge Fund Watch showing that as of last week, hedge funds were short the Euro against the dollar “like never before”…
Make of it what you will — obviously their positions have fluctuated dramatically in the last couple of years (along with the exchange rate itself).
Eurozone breakup as a central scenario
Capital Economics has been envisaging a Eurozone breakup since at least 2010, but they’ve just got a little more concrete about this being their central scenario:
Risky asset markets have generally made a bright start to 2012.
Lorcan Live, incorporating Jean-Claude Juncker (and some Rehn)
Time we went post-modern in our eurozone coverage. Read from the bottom up…
And here’s some earlier reporting from the FT’s Alex Barker et al:
Eurozone finance ministers on Monday night rebuffed a deal presented by private owners of Greek debt as a “maximum” offer for the losses they are willing to sustain,
When a derivatives counterparty leaves the euro…
Law firm Clifford Chance must be tired of fielding questions about what would happen to derivatives contracts should one’s eurozone counterparty exit the single-currency. So much so that they’ve put a document together covering 20 of what we imagine have been the most frequently asked questions.
Goldman’s € forecast: down and up
That’s a facetious title, for sure — but also broadly accurate.
Thomas Stolper and team at G Sachs have adopted a new quantitative two-stage model for mapping their macro views on to the likely possible course of the $ vs the €.
Is it a rally, or is it short covering?
Exhibit a) the euro versus the dollar:
How does one account for Tuesday’s sudden (and rather non-news specific) reversal in the euro?
Here are the thoughts of Michael Derks, chief strategist at FX Pro:
Eye-catching ECB liquidity number du jour
Note this comes from Credit Suisse’s equity strategists… but we think this is a forecast worth passing on all the same:
The stigma of borrowing from the ECB appears to have been removed as signalled by ING and Rabobank’s willingness to use the facility.
RBS on those S&P downgrades
A quick summary of Jacques Cailloux’s thinking on the Euro sovereign debt downgrades — Caillou being chief european economist at RBS…
The market implications of the ratings review are worse than a whole downgrade of the region owing to the increased political wrangling,
SNB’s Hildebrand resigns
Breaking via Bloomberg flashes on Monday:
*SNB CHAIRMAN PHILIPP HILDEBRAND RESIGNS
And via Reuters:
BERNE, Jan 9 (Reuters) – Swiss National Bank Chairman Philipp Hildebrand is resigning with immediate effect after a scandal over a controversial currency trade made by his wife,
Euro crisis, Brent oil edition
Courtesy of Olivier Jakob at Petromatrix, FT Alphaville presents the price of front-month Brent oil futures expressed in euro terms:
That would be echoes of the 2008 record oil price. This time,
Broken news on Greece and the euro
The following article from Der Spiegel was pinging around dealing rooms on Friday.
BUT IT DATES FROM NOVEMBER LAST YEAR.
Nevertheless, it has been blamed for gyrations in the money markets on Friday afternoon.
Eurout
Will get coat, but in the meantime consider this intraday chart from Reuters…
To put this in some historical perspective, the Euro is now back to where it was almost exactly 12 months ago versus the dollar,
[Something for the weekend] A Dickens of a mess
Ebenezer Draghi sighed. These bank books would never come out right, and it was Christmas Eve already. As he struggled, the numbers began to swim before his eyes. So many hundreds of billions of euros,
The LTRO, the switch and the basis swap market
Were you puzzled by the immediate reaction of the euro following Wednesday’s LTRO?
Icap’s Don Smith, has a rather compelling interpretation.
And it’s all to do with currency basis swaps and the ECB’s dollar funding operation:
Viva Espana [updated]
The Spanish auction results are out…
RTRS -SPAIN SELLS EU5.64 BLN OF BILLS VS MAXIMUM TARGET OF EU4.5 BLN
RTRS-SPAIN SAYS 3-MONTH BILL AVERAGE YIELD 1.735 PCT VS 5.110 PCT AT PREVIOUS AUCTION
RTRS-SPAIN SAYS 6-MONTH BILL AVERAGE YIELD 2.435 PCT VS 5.227 PCT AT PREVIOUS AUCTION
…
Euro rout
Brutal:
The wires are pinning the drop on this:
RTRS-EURO FALLS AFTER SOURCES SAY MERKEL REJECTS RAISING UPPER LIMITS OF FUNDING FOR ESM BAILOUT MECHANISM
RTRS-EURO FALLS TO WEAKEST LEVEL SINCE MID-JANUARY VERSUS DOLLAR
RTRS-EURO EXTENDS LOSSES VERSUS DOLLAR,
Quotes du jour – Eurofudge edition
For those of us of a certain age, the fiscal language looks to be copied and pasted from the original Stability and Growth Pact with a few bells and whistles added to imply that ‘this time we mean it.’ - Steven Englander,
Post-euro economies, charted
Crystal-ball charts via Mark Cliffe of ING (click to enlarge):
We lay emphasis on “crystal ball” given the long time-frame ING has employed, and the intense difficulty in quantifying the damage which complete break-up would cause to cross-border trade and so on.
Me like cheap dollars
A much bigger turn-out than usual from banks for the ECB’s latest operations to swap their euros for dollars:
RTRS-ECB ALLOWS 50.685 BLN DOLLARS IN 84-DAY OPERATION VS RTRS POLL $10 BILLION
RTRS-ECB
UBS doubts your eurozone contingency plan is good enough
The latest eurozone missive from UBS’ global economics team is out, and they sound worried that their earlier reports were not adequately scary taken seriously enough.
Yes, the euro is deeply flawed,
Post-euro currencies, charted
Click Nomura chart to enlarge:
Along with “redenomination risk” for eurozone financial assets, this is another of those pieces of bank research that’s as interesting for being considered necessary to be written in the first place,
Euro banknotes — the movie
Because, with the week we’ve all had… there is something strangely therapeutic in watching the printing en masse of euros — even if the printing was ten years ago. Via the ECB:
(And a full blast of the synth Ode to Joy for everyone making snide comments about needing a sequel for the roll-out of the drachma!)
Related link:
Euro *non*-redenomination risk
Amazing what you find in analyst reports on German telecom credit these days (via Societe Generale’s Juliano H Torii):
…we think investors might be waking up to the possibility of the mirror image of redenomination risk – what we will call “no-redenomination” risk (NORED) – a risk that may be severely underestimated for the German companies in our space.
Guest post: Thinking the unfolding — the break-up of monetary union
Many in the market are now thinking through the consequences of any one country (or all 17 member states) changing currencies on departing the euro. Gilles Thieffry, a Partner at GTLaw, Geneva, has perhaps been thinking it through earlier than most.
The ‘Last Days’ of the Euro
Alternative title: Why France and Germany are likely to strike a momentous deal on fiscal union sooner than anyone thinks.
Welcome back, Jonathan Wilmot.
It’s some time since we heard from Credit Suisse’s chief global strategist (and occasional FT Alphaville contributor) but he’s made up for that with a short,
The legal aspects and abstractions of a euro redenomination
And so it came to pass, that everyone who worried about whether the euros which people owed them would stay euros for much longer…
…realised that this was not a drill.
Case in point — a note by Nomura analysts published over the weekend,