The euro has had an interesting trade this week. Sometimes markets that cannot go down, instead turnaround and go up. The Monday selling dried up, and in the light trade on Tuesday, we rallied, reversing totally, the Monday's lower trade. After a few hours of rest, the bulls returneded to sent the euro higher, over the 1.30 handle to a high of 1.3020.

The pundits seemed to have some vague explanation for the rally but the numbers released today failed to support the strength. Last month, the EU Unemployment Rate set a new record, 11.6%, up from 11.5% in the previous month. There was also chatter about the Greek's getting clearance for the next bail out tranche, €31.5B, but this information is somewhat conflicted. Money is running out so they need the money now, and they also want another write down of debt, and they want more time to achieve the austerity goals.

Further, they are forecasting next year the Greek debt-to-GDP ratio will go to 189.1%.  The economy will contract another 4.5%. Yesterday, Chancellor Merkel did meet with IMF President Lagarde. There are rumors the Germans are being pressured to be more lenient. The next meeting of the troika with the Greek's is scheduled for November 12th. Should the funds not be released at that time, Greece could be bankrupt prior to the end of November.

Later in November there is yet one more European Union Summit scheduled. One of the proposals at this summit is to increase the size of the EU budget by 5% over the next seven years. Britain is a member of the EU, and implementation of the new budget would cost them £10B over the period. PM Cameron says he will accept a 2% increase; however Labour Party members are joining Tory backbenchers to rebel against any increase by the Brussels big spenders.

The dispute between the EU and Britain is not new. Recently there was a Telegraph column  that claimed, "Britain has left the European Union in all but name:

It is now clear that Britain's decision to stay out of the euro at Maastricht was a de facto decision to leave the EU as well, as Britain's political leaders feared even then. It has a taken two decades but we can almost all see now that a free and self-governing Britain can no longer be part of the Project.

This is the backdrop to William Hague's speech this morning, his cri de coeur, his warning that anger over EU encroachment has reached boiling point. "A great machine that sucks up decision-making from national parliaments to the European level until everything is decided by the EU. That needs to change. If we cannot show that decision-making can flow back to national parliaments then the system will become democratically unsustainable."

How do you make a bull case for the euro when their economy is sick, and the governing body is dysfunctional? Tony Blair recently said what the EU needs is a President. Since he is unemployed, perhaps he should apply, but if he waits he will have competition. Soon, Secretary of State Hillary Clinton will be returning home, and my guess is President Bill will then want to get out of the house.

Our recent COT Report does show the spec short positions have increased recently, but they are mostly held by the big players with the deep pockets. They usually are not quick to liquidate, so we do not fear the short position.