CEE currencies, EUR/USD, SEK, JPY to continue lower from here - heres why

* The World Bank, the EBRD and the EIB riding to the rescue of the CEE by handing, sorry, lending 24.5 BN EUR - nice gesture but not enough.

It will become progressively harder getting additional funds, which is why Hungary´s Gyurcsany`s is proposing a 180 BN Eur support package to the CEE countries at this upcoming weekend´s EU summit. Good luck in getting agreement and approval on that one!

Unfortunately, the more dire the Euro and CEE crisis is becoming - the less substance there is from the EU leaders. They still dont grasp what has to be done- this does not bodewell going forward. All talk and no action.


*Stronger USD
With the US stress testing their banks, Obama pumping money mindlessly, (the Banks still wont lend, as long as they have bad assets with ridiculous mark to market levels on their balance sheets, and are "ordered" to lend domestically ahead of internationally at the same time as they are trying to schrink/deleverage their balancesheets and the same goes for the european ones, with the addition that they have almost twice as much deleveraging to do compared to their US counterparts), leading to repatriation of US assets. This will likely trigger another wave of repatriation driven Usd buying on top of the CEE and Euro area imploding. I am adding to my already short Eur/Usd position.



*The SEK - say no more
The SEK is continuing to head towards weaker times with the Baltic impending creditlosses soon to surface, especially, if as I expect, there is a deval in that region before long.
I am adding to my long Nok/Sek



*JPY weaker despite harsh global environment
Main theme for the JPY is the desperate need for Japanese authorities to weaken the JPY ahead of fiscal yearend at the end of March. I believe there will be official support to ease the valuations for Japanese corporates via the Jpy ahead of it. On top of it, recent flow indicators have shown large Jpy outflows at the same time as the speculative part of the market has become quite long JPY. I am long Usd/Jpy.

A heads up to be issued for Eur/Jpy though as last weeks survey of Japanese portfolio managers indicated rising counterparty risk in that they will reduce their weightings of Japanese and European bondexposure while maintaining their US ones. Combined with my expectations for a move lower in Eur/Usd, this does not bode well for Eur/Jpy.



As usual, good luck











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