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Wednesday, January 19, 2011, 8:09 AM Germany's Axel Weber remains the front runner - with Italy's Mario Draghi in 2nd - for next President of the ECB after Belgium and Slovakia lay claim to another board position. France opposes Weber, but would need another "large country" to veto his appointment. Smoke-filled room politics at its best. Comment! [Global & FX]
Wednesday, January 19, 2011, 7:30 AM After rising nearly 4% over the past week, the euro gives up a tiny bit of its gains after ECB members hit the wires to tone down recent hawkish rhetoric. Euribor futures now price in 75 basis points in rate hikes in 2011. Euro buys $1.3466. Comment! [Global & FX]
Wednesday, January 19, 2011, 7:17 AM Greek bond yields pop 32 basis points higher after a report that Germany is considering allowing Greece to restructure its debt. The plan would make it possible for Greece to use rescue funds to buy back its debt in the open market. In exchange, Greece would promise further fiscal reforms. Euro +0.56%. Comment! [Global & FX]
Tuesday, January 18, 2011, 12:21 PM Matthew Lynn seeks to return the question of a Portuguese bailout from "when" to "whether." A rescue of Portugal will impose brutal austerity on its citizens, fail to stop the rolling debt crisis, and likely hasten the breakup of the EU. Admit that Greece was a mistake and restructure the debt already. 7 Comments [Global & FX]
Tuesday, January 18, 2011, 11:02 AM Apparently, there are euro printing presses scattered throughout the EU, and the Irish central bank has been using theirs, creating €51B - 25% of GDP - out of thin air for its emergency lending program. Currency markets seem nonplussed. The euro buys $1.3387, a 2 month high. 2 Comments [Global & FX]
Tuesday, January 18, 2011, 9:13 AM ECB purchases of PIIGS bonds are distorting their rate spread to German paper, making CDS pricing a better gauge of creditworthiness. "Our conclusion is that the worst is far from over," says a fund manager after Portuguese CDS blew to a record last week even as its yield spread fell. Comment! [Global & FX]
Monday, January 17, 2011, 8:40 AM ECB member Athanasios Orphanides suggests it's time for the EU to use its rescue fund for outright purchases of peripheral debt. The ECB, now holding nearly 20% of all Irish, Greek, and Portuguese paper, is growing increasingly uncomfortable with its role funding government spending. Euro -0.64%. Comment! [Global & FX]
Friday, January 14, 2011, 3:54 PM Hawkish rhetoric from the ECB's Jean-Claude Trichet and Axel Weber has Robert Sinn wondering if higher rates will be the blow that breaks apart the eurozone. Looking at the wildly varying rates of unemployment, Sinn asks how is it even possible for one rate be the right one across the entire region. Comment! [Global & FX]
Friday, January 14, 2011, 1:40 PM Fitch downgrades Greece to junk status saying, "its heavy public debt burden renders fiscal solvency highly vulnerable to adverse shocks." Not totally unexpected, the news was enough to momentarily send the euro to its lows of the session. Euro buys $1.3344. Comment! [Global & FX]
Friday, January 14, 2011, 1:02 PM The SNB loses CHF26B ($27B) on its foreign exchange holdings in 2010 after buying euros in an attempt to prop up the currency's value. In a statement, the SNB says, “events of the past year have highlighted the fact that an adequate capital cushion is paramount for monetary policy independence.” Indeed. 1 Comment [Global & FX]
Friday, January 14, 2011, 10:09 AM French opposition to increasing the size of Europe's bailout fund slips a bit as Finance Minister Lagarde admits that option is on the table. Separately, German Finance Minister Schäuble calls a report that he supports increasing the fund a "misunderstanding." Comment! [Global & FX]
Friday, January 14, 2011, 7:31 AM Following up on ECB chief Trichet's hawkishness, Axel Weber warns, “risks to the medium-term outlook for inflation ... could well move to the upside." A report shows EU inflation accelerating to 2.2% in December. After an early spike, the euro is flat at $1.3364, but the day ain't over yet. Expect volatility. Comment! [Global & FX]
Thursday, January 13, 2011, 5:11 PM Chinese assistance for Europe is in its own self-interest, a point even EU President Herman Van Rompuy is willing to (almost) admit. Other than the obvious desire to prop up the value of the euro, China is intent on ending the EU arms embargo, imposed after the Tiananmen Square massacre. 2 Comments [Global & FX]
Thursday, January 13, 2011, 2:04 PM ECB President Trichet's hawkish remarks win the day over French President Sarkozy's call for a weaker euro. Speaking at an Airbus plant, Sarkozy said the euro is "still too high" at $1.30. The euro spikes 1.8% vs. the dollar, buying $1.3370. Comment! [Global & FX]
Thursday, January 13, 2011, 9:02 AM Jean-Claude Trichet, sounding somewhat hawkish, harken's back to the summer of 2008 as evidence that the ECB will not shy away from hiking rates in the face of inflationary pressure, even when the economy is struggling. Euro pops to $1.3280. Comment! [Global & FX]
Thursday, January 13, 2011, 8:51 AM The Swiss franc falls sharply against the dollar and the euro after SNB VP Jordan mentions "extraordinary challenges" faced by exporters due to the currency's gains. The SNB took major losses last year intervening to stem the swissie's rise before giving up in June. Euro buys CHF 1.2805. 1 Comment [Global & FX]

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ProShares Ultra Euro ETF