Eur/usd - page 297
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The euro recorded a sharp drop against the dollar on Monday. At the beginning of the session bullish sentiment prevailed and there was lack of indications for depreciation of the single currency. The sudden change came after the pair scored peak at 1.1195. From then until the end of trading the bearish trend was leading. Bottom of the day was reached at 1.0996 and the finish line was crossed at a price of 1.1000. Thus, the euro lost 93 pips for the day.
EUR/USD: Greek Hangover Begins - SocGen
There wasn’t much euphoric celebration of the deal to extend new loans to Greece in return for more austerity and heavily-supervised privatisation, notes SocGen.
"But the hangover is in evidence this morning. Mr Tsipras’ Syriza Government may see significant rebellion and approval of the deal in the Greek parliament will probably only be possible with the help of opposition parties -and even then, it isn’t completely certain it will pass," SocGen clarifies.
"And all of that before we return to the perennial question of whether the planned reforms (and privatisations) can actually be carried out successfully. Suffice to say that while Greece remains in the Eurozone for now, the crisis is not yet over," SocGen argues.
In line with this view, SocGen expects EUR/USD to test the bigger psychological barrier at last Tuesday’s 1.0915 low.
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by the end of the day EUR/USD fell to the opening price and testing support level 1.1000
Greek economy minister says ministers who don't vote today for deal must quit
Stathakis on Skai tv laying down the rules
Meanwhile former fin min Varoufakis (remember him?!) tells El Pais that he doesn't accept Greek accord.
No surprises there then
Yesterday the euro registered a volatile session against the dollar. The opening price was similar to the closing price, 1.1000 and 1.1008 respectively. At the beginning the trend was neutral, but around noon the bulls took control. The peak of the day was at 1.1078 and afterwards the price was corrected and the couple returned to the starting position. Short-term indicators remain in favor of the US dollar and thus support at 1.0915 remains threatened.
Yesterday the EURUSD pair moved back and forward with lack of direction closing in the green near the open of the day, making a Long-Legged Doji. This candlestick is often used to signal indecision about the future direction of the currency although the 50% Fibonacci level (support) at 1.0955 is still holding the price.
Molotov cocktails thrown in Athens - and the far right did not start yet
Another drop on the EU due to the Greek/EU crisis.
ECB Preview: Talking Greece, Saying Nothing
he summer meeting of the European Central Bank (ECB) scheduled for Thursday is unlikely to deliver any news concerning monetary policy. Instead of monetary policy, Greece is set to take center stage.
This is gonna be a "Big Fat Greek meeting" Carsten Brzeski from ING calls it in his note.
The macro picture in Europe is pretty clear and there is no reason for the ECB to change its monetary policy stance, given the fact the bank launched quantitative easing program only in March and the bank even started the front load asset purchases in preparation for slow summer months.
The inflation rate in the euro area slowed to 0.2% in June, flash estimates of Eurostat showed on June 30. European inflation returned back to slight growth in May and June after the deflationary development in January to March period, with a negative harmonized inflation index growth rate.
With oil prices dominating the structure of lackluster inflation growth, further downside pressure on inflation is to be expected given the recent steep fall in oil prices. Oil prices fell about 15% since the beginning of July, an external environment drive that is clearly out of reach of the ECB's monetary toolkit.
With the unemployment rate close to its all-time high in the euro area and the economic growth rather moderate, monetary conditions are set to be frozen for the time being.
It is likely that Mario Draghi will rather emphasize the downside risk to the current inflation and growth outlook at the press conference in Frankfurt tomorrow, bringing up the possibility of stepping up QE if needed.
The center stage of the press conference is likely to be taken by Greece and questions about a further emergency liquidity assistance (ELA) extension and Greek banks recapitalization are to emerge, as the Greek parliament vote on reforms is scheduled to be completed by the midnight deadline on Wednesday.
Mario Draghi will again have to show his communication skills by speaking much, but saying nothing, as Wednesday night the Greek parliament passed the laws required by international creditors and the German parliament is about to discuss and vote on the bailout discussions on Friday.
Most interesting will be to see if Draghi gives his views on how to handle bridge financing for Greece. The commercial banks in Greece were closed for almost two weeks after massive withdrawals led government to implement the capital controls with the Balkan country voting on whether to accept international creditors demands. The bridge financing of Greece should provide enough liquidity for banks to start their normal operation, as well as to give country funds necessary to avoid defaulting on its €3.5 billion debt held by the ECB that is due on July 20.
Defaulting on government bond maturity held currently by the ECB is likely to launch a procedure shutting the doors for Greece to access emergency liquidity funds seen crucial for day-to-day operation of the country.
ECB communication
Walking the tight rope in communication is a tough role for the ECB, but not as much for ECB's president Draghi who is a good communicator. He communicates rather clearly, although managing the communication of the whole governing council is a much harder job.
The scandalous frontload asset purchases announcement of the ECB executive board member Benoit Coeure at the closed-door London dinner with hedge fund managers on the eve of May 18th caused a short-lived storm in the euro exchange rate, stocks and bond markets, triggering speculation that the managers attending the dinner might have taken advantage of the information.
ECB president Mario Draghi stood firmly behind Coeure saying the information about front load asset purchases was already public.
"The start of the moderate frontloading of purchases in May (and to be continued in June) was already clearly visible, and thus publicly available information," Draghi wrote in a letter in a reply to European Union Ombudsman Emily O’Reilly after she requested an explanation of the incident.
Draghi admitted the ECB's communication mistake, saying the speech should have been made public at the time of its delivery, justifying Coeure's case as "an internal procedural error."
The ECB canceled the publication of the embargoed speeches of its executive board members in the follow up of the communication incident.
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ECB preview: This is one meeting Draghi won't be looking forward to
Draghi to face a Greek grilling at today's ECB monetary policy meeting
It's Draghi day today and the July monetary policy meeting from the governing council. There's no risk of a change in policy so we can scrub that off the list
Greece will be the main topic today and Draghi will be facing plenty of questions. The ELA will be one of the main talking points, though Draghi may take the easy exit and reconfirm that the council will be making their decision after the meeting, as touted earlier this week
He will probably also be unwilling to dive into the Greek mess too far as it crosses the political line on a lot of aspects. The row with Schaeuble is likely to crop up so expect soothing words about that
In trying to keep some distance from all things Greece, the main points he's likely to make will be on the financial stability side and that's where we will get any decent price moves. Questions on whether the ECB are being choosy on their QE purchase times might come up but I expect that he will strongly reiterate that QE will be pumped in full and that the ECB will use every tool at its disposal to maintain price stability in the Eurozone for all members. That will keep the sellers happy
Greek exit questions will be fired at him and he'll furnish the same response I've detailed above
In the current environment it's hard to see how he could be hawkish in any situation so the Euro will be looking down not up
While we should expect the normal script we should also expect his rhetoric on that to be stronger, should he get bombarded with Greek questions. The ECB are a bit part player in the Troika, so far as they just apply what the politicians give clearance to
As far as trading it goes, I think the play is to fade any general comments that send the euro higher. If he steps outside the box with any comments then we'll get a bigger move, and if it's an upside move I'd expect it to be well sold into as well. The downside will be where the real action may be at and if the euro can get down to test the low 1.08's we could have some fun and games
Policy wise these meetings are now duds, unless the data craters, so it's all about the patter
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