Hello again everyone, hope you all had a great holiday period and wishing you a most successful 2012.
So I'm back in the trade after my miserable performance on the week before Christmas (already made a mental note not to trade on Christmas in the future). Can't say the year started all that bad, profited over 100 pips today so I'm quite happy about it. Can't stop but feeling bearish in regards to the eurusd cross in the medium/near term. In that line of thought would like to comment on a couple of posts made here.
Germany has a big historical and cultural issue regarding the devaluation of their currency and it is a well documented episode in recent German history - arguable one of the reasons that drove hitler to power and
to the start of the second world war. For more information on this check out the wikipedia article - http://en.wikipedia.org/wiki/Hyperin...eimar_Republic.
You are right that devaluation of currency would be beneficial to europe and in theory should drive exports up. But there is more then 1 way to devaluate the currency without direct intervention, which i believe it would be a mistake as it would drive inflation up and deteriorate the living conditions of millions of people already suffering from the budget cuts and austerity measures... We are in fact witnessing a strong devaluation of the Euro without the need of an explicit intervention from the ECB. I think this trend will inevitably continue to the benefit of Europe.
In line with what i just wrote i must completely disagree with your analysis. There are certain things that need to happen before we see a recovery in europe and most of it still hasn't been reflected in the price of the Eur. First it is absolutely inevitable an exit of Greece from the Eurozone, which should have happen already but i believe it will, probably during the first half of 2012. This will be preceded or followed by a greek default on their debt and by a recapitalization of a large number of european banks. This will generate a big turmoil in the eurozone and may even drive Portugal and Ireland to an exit, though i think both countries can still be rescued (mind you I'm bias here as I'm Portuguese) - Portugal's economy is very linked to the Spanish economy and it wouldn't make much sense to see an exit of only one of this countries (they entered the Euro together and if and/or when they exit will probably be together as well). Ireland, for the little i know of it, has created a solid industrial and technological base and if they hadn't decided to bail out their banks they could probably have afforded to deal with their real-estate bust...
Finally let's not forget the impact of all the austerity measures and budget cuts across the continent which will inevitably have a negative impact on the euro economy - current estimates of a 1% recession for next year, if i'm not wrong. We'll see a few quarter reports with bad news which will not benefit the currency. All and all i find it inevitable the continuation of the current bearish mood and even likely a parity of the EURUSD during the next year. Opposing this will undoubtedly be the US for whom a parity of the EURUSD has no interest at all and they will most likely try to counter this in some way.
As that chinese curse goes "May you live in interesting times and may you find what you are looking for". We certainly live in interesting times!
Successful trades everyone!
So I'm back in the trade after my miserable performance on the week before Christmas (already made a mental note not to trade on Christmas in the future). Can't say the year started all that bad, profited over 100 pips today so I'm quite happy about it. Can't stop but feeling bearish in regards to the eurusd cross in the medium/near term. In that line of thought would like to comment on a couple of posts made here.
Dislikedwhy was Germany opposing this, by right devaluation of EURO will help to promote growth, cheap Euro will make product produce in EURO Zone relatively cheaper which in turn spurring demand and this will have a spillover effect to business, reducing spare capacity and might ease unemployment..
Just my opinion, enlighten me if what i have said is a total nonsenseIgnored
to the start of the second world war. For more information on this check out the wikipedia article - http://en.wikipedia.org/wiki/Hyperin...eimar_Republic.
You are right that devaluation of currency would be beneficial to europe and in theory should drive exports up. But there is more then 1 way to devaluate the currency without direct intervention, which i believe it would be a mistake as it would drive inflation up and deteriorate the living conditions of millions of people already suffering from the budget cuts and austerity measures... We are in fact witnessing a strong devaluation of the Euro without the need of an explicit intervention from the ECB. I think this trend will inevitably continue to the benefit of Europe.
DislikedIt is a contrarian view and here is my post that has reasons for this long!
http://www.forexfactory.com/showthre...52#post5268052Ignored
Finally let's not forget the impact of all the austerity measures and budget cuts across the continent which will inevitably have a negative impact on the euro economy - current estimates of a 1% recession for next year, if i'm not wrong. We'll see a few quarter reports with bad news which will not benefit the currency. All and all i find it inevitable the continuation of the current bearish mood and even likely a parity of the EURUSD during the next year. Opposing this will undoubtedly be the US for whom a parity of the EURUSD has no interest at all and they will most likely try to counter this in some way.
As that chinese curse goes "May you live in interesting times and may you find what you are looking for". We certainly live in interesting times!
Successful trades everyone!
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