Euro Pairs Gap Down To Start Week June 15, 2015
Euro Crosses Gap Down On Greek/EU Deal Failure
Again they tried and failed which seems to be par for the course these days regarding any real substantive deal between Greece and its creditors. Greece still refuses to budge on pensions and a steep VAT that for Brussels is a must have in order to extend any future credit. I cant say I blame either side because the troika is just trying to see a scenario where Greece has a snow balls chance in hell of ever paying back the debt. Everybody knows the probability of ever getting paid for the credit already extended to Greece is very low. On the other hand we have Greece who admits the debt will never get paid unless the hardship on the people starts to turn to prosperity, which is also true.
So both are sitting between the proverbial rock and a hard place but the kicker question is will this really come to a head in the next week? Unfortunately probably not and both parties know this. I do remember seeing this before but admittedly forgot. However this has good potential to go on for another month. Yes I said another month of whipy Euro moves on bogus deal rumors which will turn to rumors of IMF head Cristine Lagarde filing the paperwork that Greece has defaulted. See below.
‘Deadlines’ and ‘ultimatums’ are largely meaningless because even if Greece misses its June 30 bundled payment to the IMF, Christine Lagarde would need to send a formal failure to pay letter to the Executive Board. Only then would Greece actually be in default. It’s up to Lagarde to decide when to send that letter and she would have at least 30 days. The set up for EFSF loans is similar, and besides, it seems exceptionally unlikely that either EU creditors or the IMF would put Greece into formal default while a deal is working its way through the Greek parliament, meaning all Tsipras really needs to do is get something on paper that has a chance of flying with Syriza hardliners and get it to the floor before July 20, when a payment to the ECB comes due.
In other words: expect more contradictory headlines and more ‘ultimatums’ next week as this charade continues into its sixth month.
You can just about put money down that Lagarde will be pressured to hold of on sending the “failure to pay” letter until the last moment.
EUR/USD Trying To Close Gap
So far the gap open price is holding the lows at the hourly 200 suggesting they will keep trying to close it. However if it cant push above the Asian highs before London opens then the probabilities go down substantially. If they do manage to break higher then I will look for a test of 1.1263 before considering a short. Otherwise I will be open for a long at 1.1166.
GBP/USD Push Up From Range
The GBP/USD has a clear push up last Friday giving me a bias for the next push today. If the 1.5542 or daily high just below cant hold then they will likely test down to 1.5478 before a turn. I will be open for the long at the Asian lows as long as they get rejected nicely before a test during the London session. I will be open for a short from 1.5589 with enough price action.
EUR/JPY Gaps With EU
Since both the EUR/USD and USD/JPY gapped down the EUR/JPY gap was larger at 85 pips. This has a higher probability of not closing as long as the daily low at 138.56 holds this morning so I will be open for the short from there as long as the EU is helping. I am not all that happy with what the cycle is saying so I will be open for the long at 137.49 but will need some convincing and see that the EUR/USD has hit a level and turning as well. I will also say that the gaps today are showing more of the typical risk aversion move and as long as the BOJ remains quiet on the Yen strength this should keep going if it turns full blown risk aversion today.
Forex News Today
The calendar dont have much for high impact news today but we do have some central bankers speaking. First Jens Weidmann from the Bundesbank starts it off early at the Frankfurt open. I expect they will be looking for him to mention Greece to make any sustained moves but any other comments on the ECB QE program has potential as well. Later in the day Super Mario puts in his two cents worth and likewise will be watched for carefully for any hints on more QE or not. Aussie traders will need to pay attention to an RBA member speech as well.
Asian session traders have the RBA meeting minutes to be aware of tomorrow morning.
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