As we have been observing recently, it is remarkable that the single currency is not a lot lower. Consider – European leaders are now openly canvassing the possibility that Greece might be forced to leave the single currency; tumbling property prices in Spain represent a massive risk not just to the banking system and the sovereign but also threatens to absorb virtually all of the financial resources that Europe has set aside for such eventualities; and the head of China’s sovereign wealth fund has declared that they are not buying any more European bonds. And yet, despite all of this negative news flow, the euro is only drifting downwards ever so slowly. It is a mystery wrapped up in an enigma. Could it be that a couple of sovereign wealth funds with extremely deep pockets, one from Asia and one from Europe, are hoovering up euros from the sellers in ‘unlimited quantities’? If so, is there a risk that these players ultimately decide to step back and allow the euro to find a more natural resting place? Because, it is clear to all that Europe needs a weaker currency right now to assist in the rebalancing process.  
Michael Derks, Chief Strategist