Currency Corner - Nov/Dec 2011

Bradley Gilbert provides analysis of the currency market: the euro – don’t even try to put lipstick on this PIIG!

If you are like me, you’re probably sick to death of hearing about the ongoing dramas in Europe and, more importantly, of the seesaw impact they are having on trading in general. The ECB/IMF/EU need to get their heads out of the sand and make some decisions that are going to benefit global economies.
In my opinion, it’s inevitable the euro will be dissolved. With so many differing cultures and economies it was surprising it got off the ground in the first place. No wonder the Germans are unhappy – I would be too if I were working to subsidise the non-tax payers in Greece.
Portugal, Ireland, Italy, Greece and Spain (PIIGS) are experiencing severe economic conditions. Normally, in these economic circumstances, the currency would be devalued and that would in turn lead to stronger growth through greater productivity as demand for cheaper products increased dramatically. Tourism and the like would soar as everyone took advantage of lower prices. It’s simple supply and demand economics.
The fact that the PIIGS are tied to the euro doesn’t allow this natural ebb and flow of currency strength and weakness to take place. They are wallowing in the pits of despair and need to be put out of their misery. Cut them loose and let them go about rebuilding their economies for everyone’s sake (especially us traders)...

Excerpted from an article originally published in the Nov/Dec 2011 issue of YourTradingEdge magazine. All rights reserved. © Copyright 2011, Your Media Edge Pty Ltd.
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