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fundamental analysis FX E


uro: big troubles , s trong response


Our previous ana lys i s thre e months ago ( ‘Weak Dol lar, Euro in trouble’ ) was bas ica l ly a spe cia l repor t on Eurozone problems . At the t ime the y were jus t s tar t ing to spin out of control . From March to June European per ipher y ’s (Club Med, PIGS etc…) troubles , government debt


cri ses , EU ba i lout packag e, Gre e ce debt res tructur ing , ECB inter vent ion in the bond se condar y market , aus teri t y packag e…. have a l l be en ‘ever yday word’ in the e conomic news - f low. Si tuat ion


deter iorated


even more rapidly than our (qui te neg at ive at the t ime) fore cas t , wi th mos t of Gre e ce yield cur ve eas i ly reaching double dig i t level s , but the


ag g res s ivenes s and quicknes s of pol ic y response was as wel l qui te unforese en: the ‘shock and awe’ 1 tri l l ion Usd packag e announced on May 8/9th we ek- end (af ter the ama zing ‘ f lash crash’ on the previous Thur sday) and the ECB cros s ing the border of outr ight purchase of weakes t Euro countries


(Gre e ce,


Por tug a l , Ireland) government bonds .


FX TRADER MAGAZINE July - September 2010 19


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