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How much longer can it stay up?


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I think part of the problem is that there is huge demand for EUROs from corporates and Eastern European countries that have to fund loans etc. With lending terms being so difficult, the only access to EUROs is to buy them vs their own currency because they can not find anyone to lend them. This is very simplistic but may PARTLY explain why 'reserve' currencies are still strong versus other currencies. Flight to quality, interest differentials etc also play a part.
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There is also speculation by the some major forex traders that the pound will rise to 1.7 to the dollar by September or October and that this may be a stable longer term level for the pound in relation to the dollar (the pound is currently 1.4 ish to the dollar).

So if the pound goes up against the dollar and the euro goes down against the dollar, then the pound will go up against the euro.

But no one really knows what is going to happen.

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Lynda & Richard, I thought there was an insect on my monitor when I looked at your avatar lol.

The Aussie dollar looks like it has bottomed against the US dollar for the time being, so, once again, if the Aussie dollar increases or at least does not drop any further against the US dollar and the euro drops against the dollar then you should have a big smile on your face.  

Commodity based economies like the Australian economy are in for a rough ride.  The question is, does the current value of the Aussie dollar reflect that fact already, or is there still further to go to the downside. Me thinks it has taken an absolute caning is likely to creep back up.

But in reality, anything could happen.

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Hi

Until those in charge start behaving like economists instead of politicians, or as infact will inevitably be the case sooner or later, the market will find them out......

Why is the dollar so strong ? when their economy is in dire straits and set to worsen, its because traders and investors will jump on the currency of the country which is likely to weather the storm quickest, and as the largest economy the US dollar is it.

The euro's strength against the pound is in part a simple reflection of a higher base rate, and that although europe is a victim of the crisis, its own in house more responsible lending and banking regulation has prevented the decline in the housing market as seen in UK and US. So basically europe is in better shape generally, for the moment anyway.....

My guess is the euro will hit parity with the pound in the next few months, if, the eurozone does'nt deteriorate...why? because the UK's 75 billion politically reasoned injection into the economy, will not work !

The government should be taking an economic view, which dictates, an absolute pay freeze, and more so a reduction in wages, commensurate with a negative inflation rate. If inflation is for example - 2% the economy dictates a reduction in wages of the same to maintain equillibrium. The alternative to that is a continuing loss of jobs as demand weakens further, prices continue falling, companies need to shed more jobs as revenue drops etc etc.

On that point the government should be preparing extra money to cover the added demand on unemployment benefits.( infact thats all they need do )

The government hopes this will work, but the natural laws of economics are against it.

You might say if the government gave eveyone a cash handout, free money, they would spend it and that money would help get the economy going again? No, Imagine you have 100pounds and want to buy something that costs a 100, then all of a sudden you have another 100, you think great, I'll buy 2........No, with the extra money floating around prices will increase because of demand,called inflation, and then we're back to increased interest rates and rampant inflation again,,,,with the economy still in a mess,,,,,,,,,nasty is'nt it......

Letting the markets tumble to where they stop is the only way.........

So for now the euro will remain strong,which is a bugger because I need to change some sterling, 1.10 for a pound anyone? :)

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Whilst I profess to know nothing about the moneymarkets, I find it quite interesting that since 2nd Feb 2009, the CAC 40 has lost over 600 points.  That by my maths represents more than 18% of its value, in a month.  I know it has lost a lot of value since the  middle of last year, but this last month has been a steep slide.  Maybe a sign of a loss of confidence in at least part of Euroland?
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I think euroland has a lot of problems atm, huge economic disparities between member states, increasing demands from the likes of Hungary, Greece etc, slow response of the ECB to the financial crisis, inability to respond flexibly to the economic needs of individual member states.  There be trouble ahead methinks.

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I think at this juncture, Central Banks would love to be able to inflate their way out of the current mess. Phsycologically it is so much easier than via deflation. The problem is that inevitably by the time inflation takes hold, all Central Banks will be behind the curve and we risk a return to the 70's
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I agree, I think its going to get alot worse before it gets better...and the latest members of the EU will not help the situation, they were hardly developed enough for membership, so could drag the rest of us down with them.......

still no takers for my pounds at 1.10 euros ?,,,,,,,,actually the euro has trashed the pound today its just under 92 pence from 89.5 at open.

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We are heading for competitive devaluations worldwide. (Quantitive easing = devaluation by another name)?

My guess is that the euro will split apart this autumn. The original six EU members going one way the rest ...

Question is will Germany want top prop up France?
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No country will voluntarily leave the EURO, the cost of funding, and cost in terms of depreciation would be too great. It would be suicidal. I don't think the core EMU countries, Germany, BENELUX, France could stomach ejecting them from the EURO (due to failure to maintain fiscal discipline) because politically it would be suicidal.

Unfortunately Ireland and the southern and eastern states will have to take some pretty bad mediciine. Proof that one size doesn't fit all.

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I have just looked at the chart for the pound dollar.  I'm afraid today was very bad news for the pound. 

The pound had bottomed out against the dollar and showed signs of heading upwards (possibly to that longer term target of 1.7), but today a key level of price support was broken and this means the pound probably isn't going up in a hurry.  If price breaks below 1.3505 and stays below there, then I'm sorry to say the pound will drop like a stone.  The mooted target is 1.0643 against the dollar.  In other words the pound will be a gonner. 

Now what will this mean for euro?  The euro is in a similarly calamitous situation against the dollar.  If it breaks below 1.2330 and doesn't bounce back up, then that is bad news for the euro too.

So, as Captain Jack Aubrey was fond of saying, with the euro, you are looking at the less of two weevils.

In terms of the pound euro, they may both tank and so the relative disparity may remain much as it is now.

The pound falling significantly may fuel the political call for the pound to be abandoned in favour of the euro.

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