FX Commentary EUR/USD March 7, 2012
Crunch time is at hand for the EUR/USD. More likely for the Euro all together. The hold outs are mounting up for a battle and the groups are getting bigger. With the Greek police pension fund joining. This release came from Reuters today.
Most Greek pension funds holding Greek sovereign debt have agreed to take part in a bond exchange to ease the country’s debt burden but four have refused to do so, a Greek official said on Tuesday.
The pension funds have come under pressure from workers’ unions worried the write down on Greek debt holdings will affect the viability of their funds.
About eight or nine funds have agreed to take part but pension funds for journalists, police, the self-employed and hotel workers – which hold Greek debt worth 2 billion euros – have refused, the official said.
On top of that its looking like Bingham McCutchen is adding members to their group of hold outs also. This comes from a Bloomberg report yesterday. Things are getting dicey to say the least.
“Investors in Greece’s Swiss franc bonds have formed a group to fight for their rights as the country seeks to pare about 106 billion euros ($139 billion) of debt as part of an international bailout. The group is concerned by the terms of the restructuring and is “exploring means to address its concerns and to protect the rights of holders of the bonds,” according to a statement from their legal adviser Bingham McCutchen LLP in New York. The group holds the 650 million Swiss francs ($708 million) of 2.125 percent notes due 2013.”
Its no wonder that the rumor of the PSI deal getting postponed for 3 days was floating around yesterday. Im sure they were scrambling for a way they could get more time to try and force these bond holders to volunteer to take the deal. How about that for an oxymoron. (Force them to volunteer LOL) The thing is thats exactly what they are trying to do as some bankers have said it feels like they have been treated.
This was the rumor floating around Talking Forex yesterday. When the bomb was dropped the EUR/USD plunged about 40 pips and the denial from a Greek government official had just about zero impact.
Market talk that Greek government is considering extending the deadline for the PSI deal from this Thursday to next Wednesday. Unconfirmed
And then about 35 minutes later
Greece finance ministry official denies any plans to extend March 8th deadline for investors to participate in bond swap
The fact is they cant extend the deadline or it would just about guarantee the default because if the swap is not done tomorrow there will not be enough time to get all the paperwork in order to guarantee that Greece will get the payment for the bonds that mature on the 20th. They have drug this out so long already that they will be working 24/7 and will more than likely just barely make it.
In the news today we have German factory orders but that will probably take a back seat to the ADP nonfarm payroll numbers during the US market today. If they are better than expected then my take will be decoupling theory will kick in and the Euro will drop. Of course depending on any tape bombs released during the London session. If we do get some good news on the PSI deal and better ADP then risk will most likely be on and the Euro will rise. Considering the Smart Money trend has ended and I am expecting a reversal to the upside my thoughts are we will get something of that sort with rumors today. Even if the reversal eventually fails we should be able to make some nice pips on the move. I will be looking for the trap move as usual at or near the lows to take a long position.
Happy trading guys
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