EUR/USD Forex Commentary March 2, 2012
“This is not the credit event you are looking for.” LOL Maybe I just gave away my age but I find it funny to see how the big banksters use the “force” trying to convince everyone that all is good and things are not what they appear to be.
As most expected the ISDA has determined that the Greece/ECB deal subordinating the Greek bonds held by private investors is business as usual. However given the fact that the official question was put to the ISDA for determination does show that someone thought there was a credit event. The decision was unanimous so it would seem that the anonymous fund or person who posed the question wasnt invited to the party.
Unlike some reports I have seen the Determination Committee wasnt there to decide whether the Greek PSI deal was grounds for triggering a credit event but rather the subordination scene between Greece and the ECB. The PSI haircut will be considered at a later date and will depend on how the retroactive Collection Action Clause Greece just passed is implemented. For now the CACs are just a scare tactic to get the holdouts to agree voluntarily and if they do then there will be no credit event in that case either. That determination is scheduled to take place March 30th after all is said and done when the bailout is finished. It will be interesting to see how that unfolds.
The scheduled news releases are fairly light today with German retail sales that are expected to rise slightly from the revised release last month of 0.1% (revised from -1.4%) to 0.5%. If this proves to be a disappointment it will show that Europe’s largest economy is feeling the pinch from all the austerity and world wide slow down so I will be keeping an eye on that one. Other than that the EU summit goes into its second day but with not much for tape bombs coming from the first day of the meeting I doubt there will be much today. Although nothing surprises me anymore in regards to the EU and the games that are played.
The EUR/USD daily chart has formed a spinning top for yesterday and the text books would tell you that means indecision in the market. However the way we look at it is the Smart Money is loading up for a move. It did find support at the close from February 9th at 1.3285 but also closed below the high of that day at 1.3323. At this time the direction is unclear so we will be looking for clues throughout the day today. Large moves like the one Wednesday have potential to skew the Smart Money trend so waiting is the best option for now.