Everyone Hates the Euro

[Purveyor]

Apr 16, 2015 8:47 AM EDT
By Mark Gilbert

Currencies are the equivalent of company share prices, only for countries or regions. In the same way as investors favor the stocks of well-run companies with healthy profit outlooks in expanding industries, money managers lean toward the currencies of nations with growing economies, political stability and well-run monetary policies.

On that basis, the euro region is in trouble. And with Greece running out of money, the future of the common currency itself is in peril, at least for those of us who fear that one member's exit could trigger an unpredictable unraveling.

The Euro's Existential Crisis

The euro has never been less popular with the international trading community. The Commodity Futures Trading Commission compiles figures comparing bullish and bearish bets on the currency versus the dollar. Traders have been consistently speculating against the common currency for the past year; those bets have now reached a record:



There are lots of reasons to hate the euro. Now that the European Central Bank has lurched into action with its own quantitative easing program, weird things are happening in European markets to make the currency less attractive than ever (and I don't just mean protester Josephine Witt showering Mario Draghi with confetti at yesterday's press conference). Today, the average yield on German government debt fell below zero for the first time. Yes, you read that right: Germany's average borrowing cost measured across all maturities is now less than zero:



Lending to Germany for a decade will earn you just 0.088 percent in yield, which is so close to zero as to make no difference. Given what's happening in the rest of the European bond market, investors will soon be willing to pay for the privilege of owning a 10-year German bund. The U.S., by comparison, pays 1.9 percent for its money. Why would anyone want to own euros invested in negative-yielding securities, rather than dollars which generate positive returns?

more...

http://www.bloombergview.com/articles/2015-04-16/everyone-hates-the-euro

[BlueMTexpat]

1. Perhaps currency speculators don't like it right now.

But I have noticed that a lot of those who have "hated" the Euro from the beginning are the same people that don't like the European Union and would like to see it fail spectacularly.

Just MO.

[Lucky Luciano]

2. The flip side of all the specs being short...

...is that if some news does not fit that position, then everybody is pointing the same direction - if they need to close their shorts, it will be a brutal short squeeze.

Won't be anywhere near as bad as tge tsunami that occurred when the Swiss dropped their cap to the Euro - that short squeeze was incredible.