Fleck's last Rap was interesting
"As I watched the euro get splattered on this news, it appeared to me like central-bank intervention. This being a three-day weekend, and the euro being so close to $1.30 (a price mentioned as a stress point for European exporters), I assumed that the decline was intervention on the part of the ECB. I did not expect them to say anything about it, as stealth intervention works better than when they stand up and crow about it.
I subsequently talked to a dealer friend of mine who said that many FX dealers were "hit" by selling from German banks. So, I would say that if it looks like intervention and walks like intervention, it's probably intervention, though I would not expect the ECB to admit to this. And, I wouldn't be at all surprised to see more of the same on Monday, when the markets will again be as thin as they essentially were here late in the day, when many of them closed early.
If that analysis is correct, it tells us that we have moved another notch in the steps toward crisis, as just a week ago, the ECB was telling the market what to do, and now perhaps they've been compelled to act. It's taken a couple years to get to this point, but as we traverse the steps to a full-blown currency crisis, one should not expect the timing to be linear, i.e., just because it took two years to reach this point doesn't mean it will take some multiple of two years to reach the end game. Things can escalate quickly once psychology starts to change" |
