All Euros Gravitate To Germany

 

The Euro has been around for almost 20 years. The Russian transfer ruble survived 25 years. As GEFIRA explains, the two currencies have something in common: they were and are not a success story…

The introduction of the transfer ruble was intended to enable free trade between the countries of the Eastern bloc. The creation of the common clearing system led to the exchange rates for the East German mark, zloty, forint, lev, and even the Mongolian tugrik being arbitrarily fixed by the Soviet Union, regardless of the purchasing power of the national currencies. In the 1960s, the Bulgarian lev was 20% undervalued and the Polish zloty about 45% overvalued. Since the transfer ruble was not yet convertible into Western currencies, it remained an illusion and a means by which the Soviet Union could enrich itself and save its budget at the expense of its satellite states: the Russians bought raw materials, goods, food for convertible currencies in the West and sold them to their “socialist friends” for transfer rubels. The international bank for economic cooperation, which sat in Moscow and handled all transactions in the transfer ruble, swept the real trade surpluses and deficits under the carpet. With the political change the common settlement currency came to to an end, and it turned out that the Soviet Union owed huge sums to its “brothers”.

Iran Officially Switches From Dollar To Euro

 

Just two weeks after “panic” hit the streets of Tehran as the Iranian government attempted to ‘fix’ the freefall of the Rial against the US Dollar…

Middle East Monitor reports that Iran’s feud with the US is set to get worse after Tehran announced this week that it will start reporting foreign currency amounts in euros rather than US dollars, as part of the country’s effort to reduce its reliance on the American currency due to political tension with Washington.

‘The pound is IRRELEVANT’ German financial giant Deutsche Bank in shocking Sterling swipe

Deutsche Bank branded the pound ‘irrelevant’ [GETTY•ALAMY]

 

Britain’s currency is permanently tarred after the UK voted to leave the European Union (EU), according to one of the bank’s foreign exchange strategists.

As a result, the pound is set to lose its prized status as a leading international safe haven currency, said Robin Winklertold.

Dollar to hit parity with euro in 2017

 

The dollar is likely to hit parity with the euro during 2017 driven by diverging paths for interest rates, according to Goldman Sachs’ chief economist.

The Federal Reserve is likely to hike interest rates three times in 2017, pushing it even further from the rate positioning stance of Europe during the course of the year, Jan Hatzius told CNBC at the Goldman Sachs Strategy Conference in London on Monday.

EURO PLUNGE: Single currency could ‘COLLAPSE’ against dollar amid record losing streak

Investors have frantically dumped the single currency over 10 consecutive trading sessions – the worst performance since the euro was introduced in 1999.

Head of the European Central Bank (ECB) Mario Draghi failed to ease fears after warning that the eurozone recovery depends on action by monetary policymakers.

War On Cash Intensifies: Citibank To Stop Accepting Cash At Some Branches

Less than a week after India’s surprise move to scrap its highest denomination cash notes, another front in the War on Cash has intensified down under in Australia.

Yesterday, banking giant UBS proposed that eliminating Australia’s $100 and $50 bills would be “good for the economy and good for the banks.”

(How convenient that a bank would propose something that’s good for banks!)

This isn’t the first time that the financial establishment has pushed for a cashless society in Australia (or anywhere else).

The British pound shows that US stocks are about to fall hard: Technician

Video available at the source.

 

The euro’s considerable rise against the British pound signals trouble to come for U.S. markets, according to Evercore ISI technical analyst Rich Ross.

The euro and the pound fell against the dollar after the U.K. voters opted to leave the EU, but sterling fell further, hitting three-decade lows against the dollar. According to Ross, the relative weakness in the British currency mirrors the euro’s huge rally against the British pound from 2007 to 2009.

Why Is Germany Eliminating Paper Money?

 

 

Getting rid of paper money may help fight terrorism and even help prop up the banks—but is there a more sinister reason for these new financial controls?

Germany is considering abolishing the €500 note and introducing a €5,000 (us$5,600) limit on cash transactions. It is part of a plan proposed by Chancellor Angela Merkel’s partners in the Social Democratic Party to cut off terrorist financing in Europe. Banning the bills will supposedly help make people safer. In reality, it will do the exact opposite.

German Deputy Finance Minister Michael Meister told Deutsche Welle on February 3 that Germany would push these reforms at the European level. “Since money laundering and terrorism financing are cross-border threats,” it makes sense to adopt a European Union-wide “solution,” he said. But “if a European solution isn’t possible, Germany will move ahead on its own” (emphasis added throughout).

After Crashing, Deutsche Bank Is Forced To Issue Statement Defending Its Liquidity

 

The echoes of both Bear and Lehman are growing louder with every passing day.

Just hours after Deutsche Bank stock crashed by 10% to levels not seen since the financial crisis, the German behemoth with over $50 trillion in gross notional derivative found itself in the very deja vuish, not to mention unpleasant, situation of having to defend its liquidity and specifically assuring investors that it has enough cash (about €1 billion in 2016 payment capacity), to pay the €350 million in maturing Tier 1 coupons due in April, which among many other reasons have seen billions in value wiped out from both DB’s stock price and its contingent convertible bonds which are looking increasingly more like equity with every passing day.

Greek Contagion Spreads As Several Italian Bank Stocks Failed To Open

This is how fragile the entire EU system is. If Greece sneezes, Italy coughs. The EU at best might be able to handle a Grexit, although that doesn’t look likely as stated here many times before. Look for the markets to go through a lot of turmoil but Greece is here to stay, whether its within the EU or a newly formed United States of Europe currently underway. Almost all experts agree it’s too strategically important to lose to the Sino-Soviet axis.

 

While things have normalized since the open thanks entirely to the SNB’s aggressive EUR-buying, CHF-selling intervention (good to see that central banks have read the BIS’ report and have learned from their prior intervention mistakes), earlier this morning we got a snapshot of what happens if and when the SNB, and then the ECB itself, finally lose control when as a result of the Greek crisis the contagion promptly spread a few hundred kilometers west to Italy where as the WSJ reported, “several Italian banks failed to start trading on Monday as fears over a Greek debt default induced many investors to shed peripheral stocks, including Italian, with banks suffering the most.”

Goldman’s “Conspiracy Theory” Stunner: A Greek Default Is Precisely What The ECB Wants

They all come close, but never precisely to the true endgame: The ECB is run by the Troika, which is run by Germany.

Almost every time you hear something about the Greek crisis, you’re going to hear either about the Troika (ECB/IMF/European Commission) and its components or Germany having its say in the situation. As with Cyprus, they want to create a vassal state out of Greece. We were told Cyprus was all about getting rid of corrupt Russian money laundering, etc. when it really wasn’t. What they had in mind was natural resources such as oil and gas within the area, plus a strategic military launching pad for the Middle East and Mediterranean region. Given that the Greek leadership doesn’t want to give up power, they will cave in and hand over more sovereign rights as well as the deposits of taxpayers.

When they’re finished with Greece they’ll move on to Italy, Spain and France who are facing a situation ten-fold worse. They will not stop until the entire European continent or whatever they can grab is under their control.

 

Last week, we showed a curious thesis by Goldman, which asked if there is a new and “ominous” development in European currency swings, namely the emergence of what may be a “under the table” fight between the ECB and the Bundesbank on which bonds to monetize.

This is what Goldman said then:

the average maturity of ECB bond buying is around 8.0 years, in line with what Executive Board member Coeure said in his May 18 speech. However, while Italy and Spain see purchases that have an average maturity above that of the outstanding debt stock, Bundesbank buying has fallen short from the very beginning…. This kind of signal – from the key hawk in the Eurosystem – has the potential to undercut the credibility of ECB QE, since it weakens the portfolio balance channel.

After all, it was supposed to be low yields in core Europe into risk assets. If those yields now rise and become more volatile, such portfolio effects will be lessened.

Goldman Asks, Is The Bundesbank “Ominously” Trying To Sabotage The ECB’s QE?

Goldman previously argued that the weak activity reading rattled a market that had been operating on a core thesis of strong US growth. The resulting uncertainty caused Bund yields and EUR/$ to rise, with the DAX also selling off on the day. Since then, something more ominous has come into play…

One clue has been the communications ping pong from the ECB. On May 18, Executive Board member Coeure said “the rapidity of the reversal in Bund yields is worrisome,” citing it as another example of “extreme volatility in global capital markets.”

ECB President Draghi sent the opposite message on Jun. 3, saying “one lesson is that we should get used to periods of higher volatility,” followed on Jun. 10 by Executive Board member Coeure stating that “the ECB does not intend to counter [Bund] volatility in the short term.”

Goldman took a dim view of all this in our last FX Views, even if a charitable interpretation is that President Draghi basically sent a dovish message on Jun.10 and simply didn’t want to signal “activism” in the face of short-term volatility.

“The Greek Endgame Is Here”: Probability Of IMF Default Now 70%, Says Deutsche Bank

As the farcical negotiations between Greece and its creditors unfold ahead of a June 5 IMF payment and as Alexis Tsipras is forced to spread false hope just to avoid a terminal bank run, a picture of the Greek endgame has emerged.

We’ve discussed the political implications of both an agreement or a Grexit and we’ve also taken an in-depth look at what a missed IMF payment means for the country’s EU creditors. On the political front, the troika is intent on sending a strong message to leftist political parties (such as Spain’s Podemos and Portugal’s “ascendant” socialists) that using the threat of a euro exit as a way to extract austerity concessions is not a viable negotiating strategy. What this amounts to is an attempt on the part of the “institutions” to subjugate the political process to economics. In terms of skipping a payment to the IMF — who, as a reminder, effectively paid itself earlier this month by allowing Greece to tap its SDR reserves to pay the bills — there are a number of cross acceleration concerns which you can review by referring to the following graphic:

Swiss Peg Collapses – The Euro’s Nightmare

On September 6th, 2011 the Swiss National Bank (SNB) was aiming for a substantial and sustained weakening of the Swiss franc after Swiss companies threatened to leave because the rising franc reduced their exports. The SNB would no longer tolerate a EUR/CHF  exchange rate below the minimum rate of CHF 1.20. The SNB set out to enforce this minimum  rate with the utmost determination and it began to buy Euros in unlimited  quantities.

…

Socrates has been warning about January for the last year. Here is the forecast array on a daily level and it pinpointed the rise in in volatility for today the 15th with a Panic Cycle and turning point due as well as we can see.

Swiss currency shock: blame the bank in Frankfurt not Zurich

Swiss decision probably means Mario Draghi and the ECB have at last convinced Germany that QE is needed to save the eurozone

Another day, another bout of extreme market turbulence. The last cue for mayhem has been the decision by the Swiss National Bank to abandon its attempts to prevent the franc from appreciating against the euro. Given that just a month ago, the SNB said it would hold the line with the “utmost determination”, the announcement took traders by surprise. The franc soared, the euro collapsed, shares lost their gains. It was uproar.