For investors looking to get the most upside out of a strong dollar trade, Credit Suisse suggests that emerging market currencies are likely to see some of the most dramatic shifts against the greenback in the coming months. Rising rates—or even the threat of them—tend to make life difficult for emerging market economies, particularly those with high current account deficits. Those countries depend on capital inflows to fund their operations, and when rates are low in the United States, as they have been for the past six years, investors are usually happy to oblige. But when rates are rising, investors start shifting their money back to the relative safety of the United States. The South African rand, Brazilian real, Mexican peso, and Turkish lira look particularly vulnerable to capital outflows this time around, the strategists say...Falling prices are a touchier subject for Europe, where the economic recovery is still nascent and fears of sustained deflation prompted the European Central Bank to introduce a bond-buying program earlier this year. If a believable specter of deflation reappears, the central bank would almost certainly extend its commitment to quantitative easing, while economies outside the Eurozone, such as Sweden, would also likely opt for easy policy. The ECB might even add to its stimulus, depending how much further the yuan weakens. At a time when the Federal Reserve and Bank of England are ready to tighten, relatively loose policy would make European stocks attractive. So did you follow that? This is how the butterfly effect of the global economy works these days: China devalues, European stocks look more attractive. They’ve even got a few arguments in their favor that have nothing to do with monetary policy. Fifty-eight percent of European companies that have announced second-quarter earnings have beaten expectations, and investors have also poured $1.3 billion into exchange-traded funds that track the EuroStoxx 600 index over the past month. Small-cap European stocks, which are less exposed to China than large-caps, merit particular attention.

I can't help thinking that the whole sell off (in China) was sparked by the authorities' currency devaluation. Although outside share ownership is limited it is still significant enough if they all act in concert and sell up fearing that the values of their holdings is going to drop in (say) USD terms. A bunch of them headed for €, $ or £ climes and started the snowball rolling.  Long-term low interest rates and QE (because interest rates couldn't be lowered further) has left the West's economies so weak that even a slight breeze from the East is enough to shake them. A wind from the East would blow them away.  Let it only be pointed out that the 173,000 new jobs just reported in the US was totally eclipsed by the whopping 293,000 workers who "dropped out" of the labor force. 94 million people are now "out of the workforce" in the US, signalling record low participation rates. Almost 15 million joined that category since peak employment in 2007, while 4 million jobs were created.  That's why unemployment is "so low"... fewer workers, lower unemployment creates... that's the stuff liberals like Krugman celebrate...most key indicators follow these dismal results that are swept under the rug.  US output is only slightly better than it was almost eight years ago and is now faltering as inventories are piling up and Liar's loans in the automotive industry have peaked.  As for China, Roubini seems to ignore the other Chinese bubble in housing. And the fact that the Chinese equities markets are not in free fall because the authorities in Beijing is willing to suppress any selling trends.  There is a way out for China, but in part, it means the political class has to take a long haircut. The Party bosses won't do this, so slow downward drift can be expected, especially as global customer demand tanks as well.

Just wait until the costs of all these migrants hits Europes bottom line with the Germans wondering what went wrong. The cost of these migrant hordes will drive down the Euro with countries like Italy and Greece now realising the huge financial costs of being in the front line of the migrant invasion.
Europe is now facing a break up and a return to nation states securing their own borders. They can print what they like but it will solve nothing there are too many countries in or near trouble to make the Euro a good long term bet. Germany itself will soon have self inflicted problems to deal with but that is yet to become apparent.A horrible and exquisite stalemate is emerging wherein the EU can go  neither forward nor back: the members states do not want and probably  will not accept further 'integration' which denies them sovereign control,  and they cannot retreat to former 'independence.'  The current obstruction come from not really having an independent  foreign policy and submitting to the crazy decisions that come out  of Washington (and their happy spokesmen in London). The EU has  passively conformed to allowing its own Near East to become a social  chaos and battlefield for a Holy War, funded by the Saudis and friends, drawing deluded youth from all over to become agents of a neo-barbarism that has culminated in ISIS.  Wise diplomats-- if we had had any-- would have kept Ghaddafi and Saddam in place and the economies of Libya and Iraq intact. They really constituted no threat. How ghastly now to have to weep over the desperation of a father who lost his children trying to flee to safety !  Unpleasant as it is in some quarters to hear this message: it is not the Damascus government that tortured the Chief Archaeologist of Palmyra, cut off his head and hung his headless body from a column. Rather, it was that Assad government which nurtured his work for decades and protected Syria's and the world's patrimony.

Unfortunately, they were not patient enough and jumped the gun.

The incompatibility of countries sharing a single currency goes a lot deeper than mere reforms to achieve the agreed criteria of Eurozone membership. It is cultural.  France for instance will never be able to shift away from its social model and the cradle to grave mentality of the population. Greece is another example where the culture of tax evasion will forever make the country an unreliable partner of the EZ.  The political integration necessary to make the Euro a success, will be to adopt a Teutonic discipline to fiscal rectitude. The Latin members of the Eurozone will never make the grade...Under the Euro and until the financial crisis, your "Teutonic disciple to fiscal rectitude" Germany had an average budget deficit of over 2% - larger than either the "Latin" Portugal or Spain (who ran a surplus). Now struggling Finland ran probably the largest surplus with Ireland, who received one of the largest bailouts, not far behind.  The fiscal positions of Eurozone countries prior to the crisis bear no relation to whether they did or did not have economic problems after it...The leaders of the EU project now see a far greater prize than a United States of Europe on the horizon. The concept of supra-national government, they now see, will assert human rights and 'good enough' economic well being, across not only EU member states but, especially with Obama's support, a far wider field. TTIP is the vehicle by which it will spread well outside countries the EU can reach by its own programs of expansion and bring many US based multi-nationals into the fold of cosy bureaucratic corporatist government that will ensure stability and uniformity, if not actual freedom or democracy. This is the post democracy vision of the EU's leaders: ever widening supra-national government until we have one world government. The eurozone is merely a pilot scheme, a laboratory, and lessons from it will be applied more widely to this end. It's for the greater good.

The Italian energy group Eni has discovered the largest known gas field in the Mediterranean off the Egyptian coast and predicted that the find could help meet Egypt’s gas needs for decades.

Eni said in a statement that the Zohr field, which covers an area of about 60 square miles (100sq km), could hold as much as 30tn cubic feet of gas.  “Zohr is the largest gas discovery ever made in Egypt and in the Mediterranean Sea and could become one of the world’s largest natural-gas finds,” it said, adding that it had full concession rights to the area.  The find follows other significant gas discoveries in the Mediterranean in recent years. They are expected to have a major impact on the region’s economy and potentially offer Europe new supply options, allowing it to reduce its dependence on Russian gas imports. It also represents a major boost for Egypt, where power cuts caused by gas and oil shortages have often fuelled unrest.  Eni said the discovery was at a depth of 1,450 metres (4,757 ft), and that it planned to fast-track development of the site using existing infrastructure. It said yet more gas might be discovered in future drilling.  Eni, which is 30% state-owned, is the biggest foreign oil and gas producer in Africa, where it has significant operations in Libya. In 2011, it made huge finds off Mozambique, with an estimated 85tn cubic feet of gas in place.  It has operated for more than 60 years in Egypt and is one of the main energy producers in the country, with a daily output of 200,000 barrels of oil equivalent.

James Athey from Aberdeen Asset Management, thinks Mario Draghi has managed to pull off a delicate balancing act - warning of the risks ahead for the eurozone, while reaffirming the effectiveness of QE in the real economy six months into the scheme. Once again President Draghi has been forced back onto the high wire to perform a delicate balancing act with his communication to strategy.  On the one hand, he doesn’t want to kill off confidence in the eurozone which has shown remarkable resilience in the face of weakening global sentiment and an increase in volatility. 

But he also needs to acknowledge that downgrades to global growth forecasts, the tightening of financial conditions and falling oil prices make it increasingly unlikely that the ECB will meet its inflation target over the medium term. The central bank has already downgraded its projections for inflation which made it essential that he comfort markets by saying the ECB stands ready to do more if necessary. He didn’t say it outright but there was more than a whiff of ‘whatever it takes’ from the press conference.  “The ECB will probably have to extend their current QE programme but won’t be able, nor would want to, imminently. It took Draghi a great deal of effort to win support to launch QE in the first place, extending it will require time and further a deterioration in the outlook, before we see any action.”

BRUSSELS, 4. Sep, 20:44  The four Visegrad Group states - the Czech Republic, Poland, Hungary and Slovakia - reaffirmed Friday (4 September) their opposition to quotas of refugee relocation between EU countries.  "Any proposal leading to [the] introduction of mandatory and permanent quotas as solidarity measures would be unacceptable”, the four prime ministers said in a statement after meeting in Prague.  The communique, which, the PMs say "will serve as a basis for co-ordinated positions" for the upcoming emergency meeting of EU justice and interior ministers on 14 September, as well as an EU summit in mid-October, puts them in direct opposition with Germany and France.  On Thursday, chancellor Angela Merkel and president Francois Hollande called for a "permanent and mandatory mechanism" to relocate asylum seekers in Europe.

The Visegrad countries are also at odds with the European Commission, which pushed for a relocation scheme for 40,000 asylum seekers earlier this year and is currently preparing a proposal for 120,000 more migrants.  Commission president Jean-Claude Juncker is set to put forward the initiative on Wednesday (9 September) in his State of the Union address to the European Parliament.

A day after Hungarian PM Viktor Orban met with EU institution leaders in Brussels with no concrete measures taken, his Czech, Polish, and Slovak partners said that "as an expression of their solidarity, [they] stand ready to provide Hungary with further assistance."

The Czech and Slovak interior ministers told reporters they were ready to consider a train corridor for transporting Syrian refugees heading from Hungary to Germany, if Budapest and Berlin agree.