Euro Rebounds Thanks To SNB June 30, 2015
SNB Rescues Euro, Equities Left Behind
In what looks to be a clear SNB intervention the EUR/CHF retraces all losses while the EUR/USD blew through the three day range highs ending last week. At this point its hard to say if it was actually the SNB on the rescue without some confirmation but as we have seen before regarding the CHF they cant really afford to maintain a peg but they will intervene when they feel its necessary. The other theory at hand is that its entirely possible for the Euro to be stronger without Greece as the weak link. I seriously doubt that is the reality but I have seen many put forth the idea. However considering what was released by Wikileaks over the weekend regarding France, the probability is rather low.
Earlier today Wikileaks released a new batch of NSA intercepts among which one in particular stands out: an intercepted communication which reveals that then French Finance Minister Pierre Moscovici believes the French economic situation was far worse, as of mid-2012, than perceived.
Specifically, Moscovici who served as French finance minister until 2014 and then became European commissioner for Economic and Financial Affairs, Taxation and Customs, used some very colorful language, i.e., the French economic situation was “worse than anyone [could] imagine and drastic measures [would] have to be taken in the next two years”.
Needless to say, no drastic measures were taken. In fact, no measures at all were taken because thanks to the ECB’s “whatever it takes” 2012 intervention and subsequent QE, pushed French yields to record low levels making the need for any reform moot (a la Greece, until the whole circus exploded).
Not good but also not at all surprising.
EUR/USD Closes Gap Plus Some
The 300+ pip pullback on the EUR/USD leaves it open on direction today. I suspect now that they have opened up this range they are more likely to hold inside it as the Greek issue runs its course. Its somewhat obvious the SNB cant be letting the EUR/CHF get weaker so I will look for price to be supported around the 1.1000 area if some tape bombs push it that low. Otherwise I will be looking to short from 1.1256. The lower levels at 1.1130 and 1.1103 are valid for a long but do carry more risk so I will want to see several factors showing they will hold the ADR range if it gets there.
GBP/USD Intraday Push Back To Range
The GBP/USd did make an intraday push so I will have a slight bias for the next move up but being more open on direction is warranted since there is also topping at yesterdays highs that held it in the range. If they are going to at least test the highs the higher probability is 1.5720 will hold during London. If they do break below with conviction and risk aversion is kicking in I will wait for the lows for a possible long. The safest place to be looking for a short is up at 1.5781.
Risk Aversion Holds EUR/JPY Back
I will be open on direction on the EUR/JPY as well today, even if the risk aversion short has a higher probability. Any entry would have a better chance if the EU is also moving the same while this pair having an extended move if the Yen gains strength while the Euro weak. The best short is up at 137.86 but I will be open for a long just above the ADR at 136.36 or if there is clear conviction above yesterdays highs on both EU and EJ.
Forex News Today
The scheduled releases should have a bit more impact on price movement today unless of course something big comes from the Greek mess. The probability is low since both sides seem to be digging in rather than looking for a compromise.
The early German Retail Sales most likely wont do much barring a big miss but later their Unemployment data might if they get a spike in their count. Next in line is the UK GDP figures which I dont expect a big miss but if it does the probability for a disappointment is higher. The the Euro Zone CPI data comes out expecting a slight drop. Again a disappointment seems more likely.
The US has CB Consumer Confidence expecting a rise so a disappointment should have a bigger effect but anything close will likely be ignored.
Asian session traders have Japanese Tanken Data to keep an eye on tomorrow along with Chinese HSBC Manufacturing PMI that could get them pushing the Aussie around early in the day.
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