D-Day Closes In On Greece May 11, 2015
Greece To Pay IMF 750M Tomorrow?
With Greece having to raid pension funds along with local city governments to make the last payment they made to the IMF its doubtful that they will have this next 750 million to pay the IMF this time around. However Varoufakis has said that they will be making the payment tomorrow at the same time we get reports that German FM Schaeuble on Saturday suggested that Athens may default “by accident”.
How in the heck does somebody default by accident? My best guess is when Peter refuses to lend you money to pay Paul or in this case the Troika refuses to lend the Greeks money to pay the IMF. The fact is that Greece has been insolvent since they joined the Euro and the circle jerk (ponzi scheme) has been the only think keeping them afloat the whole time. What is a little comical about the whole thing is that finally the Greeks elect people who want to address the issue as a whole and not just force the people to suffer for what previous profligate governments have done to Greece, the powers that be want to simply run them into the ground as they try to do nothing more than protect their own butts. Now that the Euro Zone is thinking that they have prepared them self for a Greek default and exit from the Euro, which is likely the case. What they cant be prepared for is the fact that there are several other insolvent countries that have been teetering on the brink as well. Once Greece is out of the picture these countries will come into the markets sights and it can only get more interesting from here.
What not many have mention in the main stream media is there has been something going on in the bond market and interest rates are rising whether the ECB likes it or not. Its just getting started and Im sure the ECB can back stop much of the selling but it wont be long as the balance sheet swells that they wont be able to stem the flow. Im pretty sure we are still a ways away from the full blown sell off in European bonds but once the focus is removed from Greece, anything goes.
And just to make things more interesting I just read this as well.
The NYT reports that “discussions in the Greek government have included assessing the pros and cons of not paying the central bank and the monetary fund, said two people who were briefed on the discussions but who spoke on the condition of anonymity. In such a case, which was described as a last-ditch option and not a plan for action, Greece would keep paying debts owed to private sector bondholders and other European governments.”
What is most shocking is that it has taken the Greeks five years to realize there are no more pros to perpetuating the massive con that is it failed zombie nation status, one that has resulted in the biggest national depression in history.
EUR/USD Holding Range Ahead Of Greek D-Day
Of course fundamentally the Greek deadline should be Euro negative but at this point I expect much more lying and faking until the last minute and there is a real chance that they actually come to a last ditch agreement if they get really scared at the Troika. Yes its a slim chance but its there. At this point its looking as though we may get early conviction on the EUR/USD this morning so I will look to see that confirmed during London with a back side set up after it moves off a decent distance.
GBP/USD Holds Election Strength
With the GBP/USD refusing to retrace any of the inefficient move on the election results along with the bottoming at the test lower during NFP it has a higher probability of making the next push up today. Since it already has a 40+ pip Asian range the current lows are valid for a set up but it would be best to see them test down to 1.5400 during London for the long today. Otherwise I will be open for it at the Asian lows but in such a scenario with no clear direction it is more risky. If I miss the long and there is a clear set up at the highs I will also be open for the short to hold the range.
EUR/JPY Asian Conviction Down
Normally I would take the conviction on the EUR/JPY during the Asian session more seriously but since this pair has not been trading off the Yen much lately I will be watching to see that the EU holds its conviction during the London session to trade this pair. As far as the pushes go it has finished the second and I will be looking for the third today. Having said that, if the USD/JPY shows strength then it wont help a trade on this pair and I will be watching the EU more closely. The best short is up at the 134.08 level but the gap open at 133.92 is valid but will need some help from the EU to hold. I will be open for the long at the Asian lows but again will be watching the EU wanting to see the correlation hold.
Forex News Today
News releases are thin today other than the BOE Interest Rate and Asset Purchases later in the day. I have my doubts they will be doing any surprises while the GBP remains strong so this should be a non event. Otherwise the Euro Group meeting on Greece could throw off some tape bombs so I will be keeping an eye out for that.
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