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ForexLive Asian market open: Welcome to 2011
Friday night saw some fixing flows drive the USD lower in very thin holiday markets and even though many markets are closed today, we should start to see a return to some semblance of normal liquidity by tomorrow at least.
EUR/USD is currently trading at 1.3340 in early interbank fare, USD/JPY is at 81.30 and AUD/USD is at 1.0210.
Some Asian regional centres remain closed today as does much of Europe.
Portugal to auction bonds next week
New Year to start with a bang…
It may get worse before it gets better
In my view, the key to the euro surviving the sovereign debt crisis intact is for the large economies like Germany and France to hold their noses and subsidize the smaller, less competitive economies while the process of putting together a consolidated European “federal” budget plays out in the coming years. A necessary consequence of that is the ceding of national sovereignty, an extremely painful and unpopular process.
It is not economics but politics that is at the root of the euro, something younger traders sometimes overlook. The euro, and a more federal Europe, are meant to draw European nations together and create a common self-interest. It is about avoiding war, not pedestrian matters like budget deficits and yield spreads.
2011 will be a very difficult year for Europe as this painful process plays out. In the end, the euro will survive, in some form. But it won’t be pretty.
Sarkozy: The end of the euro would be the end of Europe
Leaving the euro would be madness, said the French President.
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