World economy talk

[Monseratto]

BBC News - Brazil's economy falls into recession, latest figures show

Brazil's economy falls into recession, latest figures show

Brazil has fallen into recession, just a month before the general election, latest figures show.

Economic output, GDP, fell by 0.6% in the three months to June, worse than analysts had predicted, and revised figures for the first quarter of the year also showed a fall of 0.2%.

A recession is usually defined as two consecutive quarters of contraction.

[Lady Bathory]

August was a great month to be long USD. Investors bought dollars regardless of strong or weak U.S. economic data. The strong demand for dollars wasn't due the improving U.S. economy but due to the lack of alternatives. The U.S. economy is moving in the right direction while the economies of Europe and Japan are slowing down. The Fed is in the process of unwinding QE while the ECB is preparing for QE and there's no end in sight for the BoJ's QE.

[uls]

yep

as one source of global liquidity is turned off another source will be opened

[Lady Bathory]

Euro short positions are at a 2-year high. The market is expecting a big announcement from the ECB today. If the ECB fails to deliver, a massive short squeeze could send EURUSD back to 1.33. At this time, QE is not yet possible but Draghi could preannounce plans for QE. The market won't be impressed by anything less than that.

[jhnkvn]

Euro short positions are at a 2-year high. The market is expecting a big announcement from the ECB today. If the ECB fails to deliver, a massive short squeeze could send EURUSD back to 1.33. At this time, QE is not yet possible but Draghi could preannounce plans for QE. The market won't be impressed by anything less than that.

Lady, isn't it the other way around? That if the ECB delivers upon its announcement then a short squeeze would send the EURUSD higher. A short squeeze is usually acted upon a positive development after all. Correct me if wrong

[jhnkvn]

Never mind, wrong context pala. The correct context is that if the ECB fails to deliver QE, then a short-squeeze will ensure. But if the ECB delivers QE, this will further depress the supply side and send it further down.

[Lady Bathory]

The ECB delivers. They will begin QE in October.

ECB will start buying ABS, covered bonds in October

FRANKFURT (Reuters) - The European Central Bank will start buying securitised loans and covered bonds next month to help unblock lending in the euro zone, ECB President Mario Draghi said on Thursday.

"The Governing Council decided to start purchasing non-financial private sector assets," Draghi told his monthly news conference after the ECB unexpectedly cut interest rates to new record lows.

He said the bank would buy broad portfolios of simple and transparent asset-backed securities and of euro-denominated covered bonds from October, with full details of the new programmes to be given after the ECB's next meeting on Oct. 2.

EURUSD falls to 1.30.

[Lady Bathory]

Never mind, wrong context pala. The correct context is that if the ECB fails to deliver QE, then a short-squeeze will ensure. But if the ECB delivers QE, this will further depress the supply side and send it further down.

After falling from 1.34 to 1.31 in a month's time the market is still shorting EURUSD going into the ECB announcement. The market is expecting the ECB will announce additional easing measures which should weaken the euro further. If the ECB doesn't announce anything new there will be a mad rush to buy euros (short squeeze) which will send the euro higher.

But the ECB did announce additional easing measures (a rate cut and QE in October) which sent EURUSD lower.

[Lady Bathory]

The U.S.Dollar is still driving higher this afternoon. The overall strength of the dollar is seen in all crosses. The dollar is being driven higher by the recovery in U.S. yields. There's concrete belief that the interest rate differential between the U.S. and the rest of the world will be in the dollar’s favor. Last Friday’s non-farm payrolls report will not deter the Federal Reserve from ending asset purchases in October. I do not expect a Fed rate hike anytime soon but the shift in the yield curve makes the dollar more attractive.

The rally in the dollar is pushing down commodity prices across the board. We're seeing big losses in Brent crude, natural gas and nearly the entire agricultural complex.

[Monseratto]

Emilio Botin passes away...

(Reuters) - Emilio Botin, one of Spain's most powerful men who transformed Santander (SAN.MC) from a small domestic lender into the euro zone's biggest bank, has died of a heart attack, aged 79.

Santander patriarch Emilio Botin dies aged 79 | Reuters