Greeks Call Referendum RISK IS OFF June 29, 2015
Greece Calls The Troika Bluff, ECB Cuts ELA To Greek Banks
As they scramble around today trying to make sure the potential for contagion is minimal the early risk aversion move will likely be it for today. It only makes sense that the plunge protection team kicks in to prop up stocks trying to keep any real panic from kicking in. Im sure the Greeks are at least having a chuckle since technically they havent even defaulted yet. As things progress this week the potential for a real deal increases but the way it looks is though that will only happen if it looks like the ECB/Fed is losing control of the decline. If they can manage to stem the flow (which is likely) then things will calm down and they will leave Greece to dangle in the wind. As Max Keiser said over the weekend “its all about using the numbers to do the sales pitch”
Below is something real interesting I read over the weekend. Very plausible indeed.
Here’s the reality: If we had “normalized” rates tomorrow the entire financial system would collapse under the weight of the math. In short: Default.
Which brings us to Greece, the truth and indeed the future:
Greece for all its structural faults is the most prominent victim of fictitious numbers. From the original Goldman Sachs deal to get them into the EU based on fantasy numbers and to numerous bail-outs, the simple truth has always been the same: The math doesn’t work.
It never has and it never will until there is a default on at least some of the debt.
And in this context the Greek government’s move to call for a public referendum on July 5 may be a very clever strategic move as it forces the issue of math.
Here’s the strategic frame-up:
Ultimately what Greece needs is debt relief. Big time debt relief to make the math work. The global cabal of creditors, ECB, EU, and IMF do not want that. No, odds are they’re not going to let Greece default. They can’t afford to. The math has to work.
EUR/USD Gaps Down 170 To Open
The EUR/USD has no cycle of direction so I will be waiting well into the week before having a bias on this pair. In the context of the content above I expect it to be choppy at best with an obvious fundamental bias negative. Having said that I have my doubts they will let it pass much below 1.0924 today so I will be open for a long there. Otherwise I would prefer a short either from the Asian highs or up at 1.1080 if they push higher during London today.
GBP/USD Closes Inefficiency In Gap Early
With the GBP/USD making a valiant effort to close its gap early on today this will be my preferred pair to trade today. I dont have a bias on direction but if the ris aversion holds then the short from 1.5720 has the best probability. Otherwise I will be looking for the long at 1.5678 or just below since it has a better chance of holding this range while they work up a plan.
EUR/JPY In Uncharted Territory
With the massive gap and blowing of the ADR early on its best to stay away from the EUR/JPY today. The only levels are from the daily chart and just beyond the ADR high/low so any trade in side is too risky. If they do manage to push the EU up and show some conviction on EJ above the Asian highs then a continuation long has a decent chance but will need to see some news on how they are either planning to deal with Greece or an announcement of some concessions from the Troika that are backed by Germany and the IMF. If not the risk aversion will likely continue to test the lows at 133.75
Forex News Today
There isnt anything on the calendar today that has potential to trump any tape bombs so it will be wise to watch the news wires today and see how things are progressing. Everybody has played their cards so we will need to see what fruit if any comes from the emergency meetings going on and will likely happen every day until they see the markets calm down. We can just about guarantee they will be saying anything and everything in an effort to calm the markets but nothing would surprise me. Let the game of chicken continue.
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