The 100 day moving average of the dollar index has started moving up, and the 200 day isn’t far behind.
This means futures based and other trend followers will start piling in, depending on their
system parameters. With the dollar index 57.6% euro this will but serious downward pressure on the euro for purely technical reasons.
questions:
Where do euribor swaps get priced if euribor settings cease?
Are there default provisions to deal with this possibility?
fix it to DM Libor settings?
Today’s WSJ review of a book on Hobbes makes Hobbes’ Leviathan sound like the philisophical underpinning of Soft Currency Economics:
The Art of Being Ruled- Hobbes and the Law of Nature
“Hobbes was a supporter of kings but not of their spurious claim to divine right. “Leviathan” asserted, in its place, a secularized and abstract “sovereignty.” Sovereignty was not divine or natural. It was an artificial construct, devised by subjects themselves.”
There are already record shorts at the CME EUR contract. These two technical indicators are going to add to it.
Plus, we’re coming up on the end of the month. Some trend followers use monthly charts and weekly charts.
The 80 period BB trend following has already been activated, and now people have put on first and second levels of risk addition. From a Bollinger Band analysis, the EURUSD has not hit 3 SD’s from the 80 day average, so it is not wildly oversold.