EUR/USD: Greece Is Preparing A Last Minute Proposal
Growth Aces | Jun 30, 2015 08:10AM ET
GROWTHACES.COM Forex Trading Strategies
Taken Positions
GBP/USD: short at 1.5770, target 1.5500, stop-loss moved to 1.5770, risk factor ***
USD/JPY: long at 122.50, target 124.20, stop-loss 121.80, risk factor ***
USD/CHF: long at 0.9280, target 0.9500, stop-loss moved to 0.9195, risk factor ***
Pending Orders
USD/CAD: buy at 1.2280, target 1.2560, stop-loss 1.2200, risk factor **
AUD/USD: sell at 0.7770, target 0.7580, stop-loss 0.7855, risk factor **
EUR/USD: Greece Is Preparing A Last Minute Proposal
(stay sideways)
- European Union and Greek government sources said that European Commission President Jean-Claude Juncker made a last-minute offer to Athens in a bid to reach a bailout agreement before the deadline expires today. Under the offer, Prime Minister Alexis Tsipras would have to send written acceptance by Tuesday, in time for an emergency meeting of the Eurogroup of Eurozone finance ministers to be held and agree to campaign in favour of the bailout in the planned 5 July referendum.
- If the offer were accepted, the Eurozone finance ministers could adopt a statement saying that a 2012 pledge to consider stretching out loan maturities, lowering interest rates and extending an interest payment moratorium on Eurozone loans to Greece would be implemented in October.
- The Greek daily Kathimerini reported that Prime Minister Alexis Tsipras is considering a last-minute bailout proposal by the European Commission. According to other media reports, Greek government was preparing a last minute proposal for a debt deal.
- Standard & Poor's Ratings Services lowered its sovereign rating on Greece to 'CCC minus' from 'CCC', saying the probability of Greece exiting the euro zone was now about 50%. Ratings agencies have said a failure to pay IMF loans is unlikely to lead to default ratings, but may lead to further downgrades. S&P said according to its assessment Greece would likely default on its commercial debt during the next six months.
- The EUR/USD was in “euphoria mode” yesterday. The rate rose from 1.0955 to 1.1279 during the day and was above Friday’s close at the end of the day despite the fact that speculation about a Greek departure from the Eurozone had dominated the headlines. Implied volatility on one-week EUR/USD options rose today to around 18% from 16.5% late on Monday. EUR trading is a risky game now.
- The market is ignoring macroeconomic data that are negative for the EUR. The Eurozone inflation softened in June to 0.2% yoy from a 0.3% in May. The figure was in line with expectations. However, far lower than expected inflation figures for Germany released on Monday had braced the market for a potentially weaker number. Preliminary data for Germany showed on Monday that HICP inflation inched up by only 0.1% yoy, a steep drop from the 0.7% yoy increase in May.
- Excluding energy and unprocessed food - what the European Central Bank calls core inflation - prices in the Eurozone were up 0.8% from 0.9% in May.
- The US National Association of Realtors said on Monday its Pending Home Sales Index, based on contracts signed last month, increased 0.9% mom and 10.4% yoy to 112.6, the highest level since April 2006. The reading was slightly below the median forecast for a 1.2% mom gain.
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Significant technical analysis' levels:
Resistance: 1.1243 (hourly high Jun 30), 1.1256 (10-dma), 1.1279 (high Jun 29)
Support: 1.0955 (low Jun 29), 1.0916 (low Jun 2), 1.0887 (low Jun 1)
GBP/USD: Short For 1.5500 On Expected Sound US Figures Later This Week
(short at 1.5770)
- The Office for National Statistics revised up GDP growth in the first quarter to 0.4% qoq from an initial estimate of 0.3%. The ONS also revised up growth in year-on-year terms to 2.9% from 2.4%. ONS figures showed that net trade acted as a drag of 0.6 percentage points on GDP in the first three months of 2015. Household spending was the biggest driver, and the ONS also reported upward revisions to earlier estimates of business investment.
- Market research company GfK said British consumers' mood was now the most buoyant since January 2000, after its monthly sentiment index jumped to +7 in June from May's +1, the biggest rise in a year. GfK said the increase in the index was driven by a big jump in consumers' willingness to spend on expensive one-off purchases, as well as broader increases in how well people thought their personal finances and the economy as a whole would do this year.
- Bank of England chief economist Andy Haldane said recent strong wage data had not changed his view from earlier in the year about the dangers of tightening policy too soon, adding that a drag on growth from GBP strength could outweigh the gains from higher wages. However, Andy Haldane is a dovish outlier in the Monetary Policy Committee, particularly as he had raised the possibility of cutting interest rates below their record-low 0.5%.
- We went short on the GBP/USD at 1.5770 yesterday. In our opinion the GBP/USD is likely to fall on expected strong US macroeconomic data in the coming days. However, we should keep the stop-loss tight due to Greece headlines risk.
Significant technical analysis' levels:
Resistance: 1.5780 (10-dma), 1.5789 (high Jun 29), 1.5803 (high Jun 24)
Support: 1.5645 (low Jun 29), 1.5627 (low Jun 17), 1.5561 (50% of 1.5191-1.5930)
AUD/USD: RBA: Further AUD Depreciation Likely And Neccessary
(sell at 0.7770)
- Reserve Bank of Australia Governor Glenn Stevens said: “We've been saying that further AUD depreciation is both likely and necessary, there is no change to that language.”
- The Housing Industry Association reported new home sales dipped 2.3% in May. It was the first monthly fall for 2015. The Reserve Bank of Australia said housing credit rose in May 0.5% mom and 7.2% yoy. Total private credit increase by 0.5% mom and 6.2% yoy. The data were in line with expectations.
- The AUD has so far proved relatively resilient in the face of market concerns about Greece, in part because the uncertainty over possible default and an exit from the Eurozone has led investors to push back the likely timing of a rate increase from the Federal Reserve. However, we still expect a rate hike in the USA in September. That is why our trading strategy is to sell the AUD/USD on upticks.
- The AUD remains strong against the NZD on bets the Reserve Bank of New Zealand will cut rates again at its next policy review on July 23. In our opinion this cut is not a done deal given recent strong depreciation of the NZD.
Significant technical analysis' levels:
Resistance: 0.7713 (high Jun 29), 0.7725 (10-dma), 0.7739 (high Jun 26)
Support: 0.7633 (hourly low Jun 29), 0.7587 (low Jun 29), 0.7572 (low Apr 15)
Source: Growth Aces Forex Trading Strategies
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