Euro – good buy or good bye?

The festive season is upon us, again. Thoughts naturally drift towards family and stuffing, the who and what I naturally leave to you.  

The last column I wrote I covered the lack of cash circulating in the system and how it could affect house prices. This hasn’t changed much. Talking exclusively about overseas markets here, and I think you will get sporadically bad news about housing for the foreseeable future.  Housing starts will decline, permits may not get converted into actual house starts and bank forced sales will become common.

The euro has had a bit of a rollercoaster, but has only had a 3 per cent drop month on month; it still stands up 9.5 per cent over the past 6 months and 8.5 per cent down on the year, so is that good or bad?  Depends when you bought, I guess. 

The prognosis for the euro is going to be dependent on getting the weakest performing countries into the ten step programme. Some are still just peeking out of the duvet trying to piece together what happened last night, others are well on their way to a cooked breakfast and a couple of aspirin. Until they collectively get to work on time, washed and shaved, clean shirt and a bit less bleary eyed, there will be severe periods of doubt over whether the euro is a good buy, or a good bye. Once they have all hit rock bottom and have started down the right path the euro will likely trade in a saw tooth pattern, albeit in a generally upward vein.  Buy on dips, don’t get greedy and keep the stops close.

Since the last column, the Aussie dollar shot through parity, got a bit scared in no man’s land and retreated a bit. Don’t count it out; it still has a lot going for it, although it will face increasing pressure when other major countries manage to pull their socks up. And if the economic miracle that China has been ever unravels, then you will see a bigger pull back than seen in last half of 2008. It’s a big If and not one you should hold out hope for, but nothing goes up forever – just maybe for the next year or so.

“The threat of Christmas hung in the air, visible already in the fretful look of passersby as they readied themselves for the meaningless but necessary rites of false jovialities and ill-considered gifts.”