Fx Commentary EUR/USD February 27, 2012
Its not very often I add a news source to my long list of providers. With Bloomberg, Reuters, FT, Forex factory and most often Zero Hedge I have plenty of places to keep me up to speed on the news. However recently one of the contributors to ZH wrote a great piece that I admired so I signed up for their weekly newsletter and I am glad I did. Its called Things That Make you Go Hmmmm.
I mention this because in just the second newsletter I received over the weekend they made a great analogy to the basic problems Europe has and how they go about fixing things as simple the flawed construction model of the Leaning Tower of Pisa. Saying that instead of fixing the root of the problem (the foundation in this case as with the Euro) They make small tweaks and adjustments along the way making everything look good for the moment but eventually the flaw which never left comes back to bite them in the butt. Its a very good read.
Not only that but they share much of the same view as I do about what is going on in the world and its refreshing to know your not alone with your thoughts. They also recommended to listen to an interview with Ben Davies of Hinde Capital of which I had already done and was well worth the hour it took to listen. I have no affilations with them but when I find something of value I like to pass it on to those that read this commentary. The newsletter is free.
Next I found that my thoughts that the US has the same (if a different scheme) issues with its financial system of big boys who do what ever they want at the expense of either unwitting, corrupt or just over confident customers. I am referring to the reminder of the 2 year long investigation of Goldman Sachs for their role in getting Greece into the Euro by helping them fudge their books with a currency swap. Supposedly all legal but if a trader as myself can see that something underhanded was going on then those that are clearly way above my pay grade should have seen it. I am betting they did and didnt care. Check out this video on just how the investigation is going 2 years after the news on this loan disguised as a currency swap came out. In my opinion this kind of legal underhanded dealing puts some light on the fact that the US and most other western financial markets share some of the same types of structural flaws. The fact is this sort of thing started in the US way back with the Rockefellers when they lobbied (bribed) congressmen to change the laws governing business in separate states in the US from a business that has to be for the benefit of the people to a business thats sole purpose is to gain profit for the company. This was when we started to lose our morals and it has only gotten worse over the last 130 years.
In other news the G20 meeting over the weekend provided no real answers to the Greek farce since the countries with any chance of beefing up the IMF funds for Europe want to see the EZ do their own boosting of the ESM before any will contribute more cash to the IMF fund. Again Germany along with Finland are the ones refusing to pump more cash into the fund but did seem to lighten up a bit by the end of the meeting. To me the comments show that since they are worried about what the obligation might mean to their own creditworthiness. They are probably not as in as good of financial shape every one thinks. Just my 2 cents.
Getting to the daily chart of the EUR/USD. It looks to have broken a head and shoulder pattern but has a longer term H&S pattern that may hold also. Thats why I dont trade those patterns. The way I see it is the December 5th high at 1.3487 is holding and Fridays close was below the close from December 1st at 1.3460. The daily wicks there tell me there was a lot of selling. I am thinking there should be at least a retrace to test the 1.3400 level or a reversal from here but keeping an open mind.
Sorry guys no charts today. We are upgrading the server and it will be back to normal later this week.