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EUR/USD Forex commentary January 18, 2012

In todays EUR/USD commentary I am going to briefly discuss Greece. I think everybody could use a break on it LOL. Reports are looking better for the IIF and Greece making a deal however nobody I see believes the deal will be enough to make the debt sustainable and only buying time. Enough said.

My fundamental focus is now going to be keeping a closer eye on Germany. There was alot of ECB speak yesterday on just how they are to maintain their back door QE tactics. Mulling over a full blown QE scheme for the future. This in no doubt will literally get right in the craw of Germany and many are saying that the Germans have begun building them self a back door out of the euro. This was reported at Zero Hedge this morning and has been mostly ignored since these news releases are not new.

German Chancellor Angela Merkel’s Christian Democratic Union party voted to allow euro states to quit the currency area, endorsing the prospect of a move not permitted under euro rules. The resolution reads:

“Should a member [of the euro zone] be unable or unwilling to permanently obey the rules connected to the common currency he will be able to voluntarily–according to the rules of the Lisbon Treaty for leaving the European Union–leave the euro zone without leaving the European Union. He would receive the same status as those member states that do not have the euro.”

BBK Thiele: Current ECB Government Bond Buys Violate Treaty

The European Central Bank’s government bond buys are a violation of the Maastricht Treaty, Bundesbank board member Carl-Ludwig Thiele said Monday.

Thiele recalled that the decision to buy Greek government bonds had found no support from German ECB Governing Council members. “Germany was over-ruled on the Council,” Thiele said.

“These buys were a violation against the prohibition of monetary financing, that is the basic principle that a central bank should not give credit to a state,” Thiele said in a speech text provided by the Bundesbank.

The facts is this is just a small portion of what has been quoted from Bundesbank officials. I expect as the QE talks come closer to actual printing we will be hearing more and more and there will be a nasty surprise in the making for the Euro. Like I said in earlier posts. This is getting interesting to put it lightly.

News is fairly light today during the London session but there is inflation numbers and TIC data coming out during NY today. I believe the most watched will be the TIC data as we will see just how optimistic foreigners are on the US coming out of its hole and if the decoupling theory is really true.

Looking at the charts as of now it seems the optimism during the Asian session is holding firm and we have a nice move up brewing for now and will most likely continue during the London session as it did yesterday. It will be interesting how the market reacts to the 1.2800 level again. A clear break there and its most likely going up to 1.2900.

Looking here at the 15 minute there was a Sudden Shift (Jump bar) entry long this morning. I would consider it an aggressive entry but has moved of nicely and looks to be attempting to reach the 1.2800 level during Asia today. We will see.

Take care and be careful out there.


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