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Politics is hanging over the exchange market

Politics is hanging over the exchange market
It seems that only on Monday European politicians became aware of implications of Greece exit from the Eurozone, when they saw first reaction of markets to failed negotiations on Saturday. It was followed by strong statements about readiness to continue negotiations and necessity to retain Greece in the Eurozone, made by Merkel, Juncker and Hollande. Decreased risks of the Eurozone’s disintegration provoked rapid recovery of euro. Besides, investors made a mass exit from European shares and bonds, what also increased demand for European currency. Herewith the statement of the Minister of Economy of Greece that payment of regular tranche to IMF was impossible, didn’t influence euro considerably. Noteworthy is a fact that rate agencies aren’t going to regard this event as a default. As a result, by the closure of the day euro regained all morning losses, closed gap, and closed above 1.1200, herewith maximum range of the day was of more than three figures, what indicates extremely high volatility.

Today economic news background is interesting – retail sales and unemployment in Germany, unemployment and inflation in the Eurozone as a whole, index of consumer confidence in the U.S.A., GDP of the U.K. and Canada. At any other time such statistics could become the base for formation of considerable movements in the exchange market. But now everything is in hands of politicians. Today the focus of attention will be on questions of non-payment of a regular tranche to IMF by Greece, politicians’ statements about retaining Greece in the Eurozone, probably, first results of polls among Greeks concerning agreement with creditors will appear. There is a high uncertainty, what causes instability of markets.

 

Trade tactics:

Let us speak frankly: such rapid recovery of euro took us by surprise yesterday. We expected longer period of formation of reversal pattern downward. Our position was closed on stop, though without loss. Still, undrawn profit is so huge, that it is time to talk about “psychological knockdown” after yesterday’s trades. The best way out of this situation is to take a break in active trading. So, today we aren’t going to open new positions and we will spend day correcting mistakes.

 

Any opinions, advice, news, research, analyses, prices or any other information presented on this webpage is provided as general market commentary and does not constitute investment advice. "Vector Securities" shall not be liable for any loss, including loss of profit, which may arise directly or indirectly from the use of this information.



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