Friday, May 14, 2010

Euro at 2010 Low, US Dollar at 2010 High


Euro: At 2010 Closing Low (1.2356)

The Euro is down -3.14% for the week, down -7.08% for the month, down -13.73% for the year, and now down -1.13% since the March 3, 2009 previous market low.  The EU, ECB, and IMF announced a $1 trillion bailout last weekend to rescue Greece, weaker EU countries, the European financial system, and the EU monetary and currency system (Euro).  Fiscal austerity measures were agreed to by the most financially weakened EU countries, including Greece, Portugal, and Spain.  The larger, more financially sound EU countries such as Germany and France did the bailing out of the smaller, financially weak EU countries.

Germany and France have committed their own resources to save the EU and the Euro.  The optimistic view says the $1 trillion rescue package will work.  The austerity measures that Greece and other EU countries have agreed to are harsh, will hold those economies back in or near recession, but should show positive results in about 3+ years.  The negative view is that the EU Bailout won't work ultimately.  Nouriel Roubini is in this camp and states his opinion here.

This week's Euro Crash has had a bearish, downside result for USA and Global equities.  Hence, the intense scrutiny worldwide by investors, bankers, economists, governments, et. al. in  the Euro, EU, ECB, IMF, and the overall crisis in Europe.  Europe's crisis could be a drag on external economies such as the USA.  However, so far the GDP growth of the EU, Euro Zone, and some member countries is still reasonably positive, for now.

Below is the Euro/US Dollar daily chart for 2010.  The higher yellow horizontal line is the Friday, May 7 close of 1.27507 which was before the EU Bailout on Sunday, May 9.  The lower yellow horizontal line is the Friday, May 14 close of 1.23560, a full trading week after the EU Bailout.  So far, markets have clearly cast a vote of no confidence.  The yellow downtrend line, of no consequence presently other than emphasize how far the Euro has sank, is from the peak high on November 25, 2009 of 1.511 down through the peak high on April 13, 2010 of 1.36599.

US Dollar: At 2010 Closing High (86.23)

The US Dollar Index is up +1.94% for the week, up +5.38% for the month, up +10.62% for the year, and now down only -3.30% since the March 9, 2009 market top.  USD is in full blown bull market, safe haven mode as a result of the EU and Euro Crisis. 

Below is the US Dollar Index daily chart for 2010.  The highest yellow line is the downtrend line from the March 9, 2009 closing peak of 89.17 down through the current close, May 14, 2010 of 86.23.  The lower lavender line is a very long term downtrend line from January 2002 closing peak of  120.22 down through the March 9, 2009 closing peak of 89.17.  The Euro Crash this week propelled the US Dollar through this long term downtrend line.


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