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Greece Uses IMF Reserves To Pay IMF May 13, 2015

Greece Effectively Defaults As It Makes IMF Payment

Everyone was wondering just where Greece was going to get the money to pay the IMF yesterday since we knew Greece didnt have any extra cash laying around. They have already raided pension funds and tried to squeeze local governments. As it turns out they did have 650 million sitting in an IMF reserve account so they just used IMF money to pay the IMF. One just cant make this stuff up and is the true definition of circle jerk. The question is, just how long can this go on? Well in reality this has potential to continue for a very long time, at least until one party in the circle decides they arent having fun anymore and decides to quit. Then the whole thing falls apart. At this point we will have to wait and see how far the IMF pushes since its looking like they are having the least amount of fun right now. However I suspect they will be pressured by the ECB and maybe even the US government to keep the circle going. This was from Reuters.

Greece tapped emergency reserves in its holding account at the International Monetary Fund to make a crucial 750 million euro (539 million pounds) debt payment to the Fund on Monday, two government officials said on Tuesday.

With Athens close to running out of cash and a deal with its international creditors still elusive, there had been doubts whether the leftist-led government would pay the IMF or opt to save cash to pay salaries and pensions later this month.

Member countries of the IMF have two accounts at the fund – one where their annual quotas are deposited and a holding account which may be used for emergencies.

One official told Reuters that Athens used about 650 million euros from the holding account to make the payment.

“We made use of money in our holding account in the fund,” the official said, declining to be named. “The government also used about 100 million of its cash reserves.”

And from El Mundo we see that the IMF is not having fun anymore. Looks like they may be closer than we think to taking their ball and going home.

The International Monetary Fund (IMF) has shown the Eurogroup their desire not to be part of a possible third bailout of Greece, which would amount to 50,000 million and would be vital for the survival of the Hellenic country. The absence of really emotional action by the executive with whom Tsipras contain spending and tackle the deficit, as well as the challenges it has done in recent weeks, as the readmission of public employees has caused the agency wants let all the weight of aid to Greece in the hands of the Eurozone and the ECB.

The fact that the IMF wants to stop being part of the bailout of a country is particularly serious, not in vain this institution is always the last resort of economies whose situation is more complicated. Therefore, the IMF has priority over other creditors in the order for recovery and, in all history, only Zimbabwe, Somalia and Sudan have failed to fulfill their obligations to it. However, given the difficulties to unlock a new rescue aid tranche that matures on June 30, the Washington-based organization fears that Greece will become the first economy in a developed nation it incurs a default, as They have confirmed to THE WORLD sources familiar with the process.

EUR/USD Runs First Push Up

The EUR/USD has made a clean push to the upside but I have to admit the rejection at the highs and potential topping does show higher probability for the fake out as well. At this point I will be bias for the long today but if we get any conviction below 1.1205 then I will look for the short to test the lows. If they dont push it up higher during Asia the probability of the 1.1205 level holding goes down but I prefer to not see the conviction during the Asian session unless they push well below and set up at the backside during the London session.

Great job to those who caught the short on this pair after the room yesterday. I did take it after the set of legs at the highs from 1.1269 and when it almost hit my profit target and retraced I moved it up to +40 that was hit when I slept.

EURUSD First Push Up 5-13-2015

GBP/USD Shows Topping After Third Extended Push

The GBP/USD is slowing its ascent and showing some topping after a third clean push. I do somewhat expect a test to the next daily level at 1.5784 since it has shown nothing but daily strength but I will also be open for the short for the reversal. It has already pulled back around 60 pips so that may be all we get. I would prefer to see the conviction upward before I look to the Asian highs or lows for the long trade but will be open for it at 1.5644 with a clear set up. Otherwise I will also be open for the short with a stop run to 1.5703 watching for any conviction to the upside.

GBPUSD Third Push and Topping 5-13-2015

EUR/JPY  Pushes Up And Topping With EU

With the EUR/JPY still in lock step with the EU I will have a small bias for the next push up while looking for the correlation to hold. The best long is at the current Asia lows of 134.26 but they may hold it a little higher during London if the EU finds its support first. The only place I will look for a short if I am not long waiting for the break upward is up at 135.15. Otherwise I will be looking at backside entries to test the highs if there is no set up and they show the conviction above 134.58 during London

EURJPY First Push Potential Topping 5-13-2015


Forex News Today

The calendar start early today at the Frankfurt open with German CPI and GDP data. Expected mostly flat with just the quarterly GDP expecting a drop we probably wont see much but an attempt to run stops as long as they dont miss big. Later the French CPI and NFP could get some reaction on a big miss but only if CPI drops below zero I suspect. Later the ECB Publishes Account of Monetary Policy Meeting which has potential to get them pushing the Euro around but usually mirrors the Press Conference so the chance is low.

The UK has Unemployment and Average Earnings but baring a big miss here they will more than likely wait for the Inflation Report later in the day. All eyes will be on Carney waiting to see if he mentions a rate hike in the near future. I have my doubts but it wouldnt surprise me either. If he does then the GBP/USD will surely test the daily highs I mentioned above.

The US has Retail Sales data expecting a rise in the Core data and a larger drop including automobiles. Considering that, I see a better chance of the Core disappointing but will remain to be seen. Any large disappointment will cause more USD weakness and likely extend any push up while if by chance these miss upwards we should see them at least halt any stiff rise in the EU and GU

Happy Trading



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