Position in Europe: Short EUR-USD (FXE)
Keith shorted the EUR-USD currency pair via the eft FXE in the Hedgeye Virtual Portfolio today with the pair trading towards the top side of our immediate term TRADE range of $1.34 - $1.39 and broken across our intermediate term TREND level of $1.39 (see chart below).
In the last two weeks the pair has seen significant swings based on the political rhetoric of Eurocrats – from those suggesting the imminent default of Greece to those stating that additional funding assistance will be provide to prevent a default. Yesterday’s news that the ECB is coordinating with the Fed, BOE, BOJ, and SNB to extend 3M dollar loans to Eurozone banks in an effort to ensure they have enough cash for the rest of the year has buoyed the pair, yet we’ll fade the news for a TRADE as we think it is but another near term filler in Europe’s sovereign and banking debt contagion "crisis".
We’re waiting to hear if any major decisions are reached at the European Finance Ministers meeting in Poland today, including whispers of IMF chief Christine Lagarde’s Euro-TARP proposal. Trichet is due to give a speech at 8pm. We think Germany’s EFSF vote on September 29th is the main catalyst to keep front and center as it is the lynchpin for future policy decisions.
Next Thursday, on September 22nd, 2011, the Hedgeye Macro Team will be hosting a conference call to discuss the future of the Eurozone and the implications for global markets. The call will focus specifically on three topics:
- Review of the history and structure of the Eurozone
- Assessment of the current situation and imminent risks and opportunities
- Analysis of potential and realistic scenarios to solve the crisis in Europe