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    Greece has euro by the throat

    Greece has euro by the throat

    Yesterday’s inactive trades in narrow ranges were replaced by sharp decrease of euro in the evening. Once again, the reason was Greece. At the meeting within the framework of the European Commission parties failed to come to compromise and make any decision. Greeks are negotiating aggressively, on the verge of breaking the rule, demonstrating its decisiveness to achieve desirable aims of weakening conditions of debt service. The Eurogroup can’t give up its positions fully, as it will become an example for others both now and in the future. At the same time, exit from the Eurozone will have catastrophic consequences for Greece itself, and it is clearly understood. That’s why, almost immediately after the end of this meeting, some peaceful notes appeared in Greek statements. The Minister of Finance of Greece Varoufakis expressed confidence that negotiations will continue, and parties will succeed to find a compromise. A new meeting within the framework of the Eurogroup can be held on 20 February. It stopped euro’s fall, Asian session passed more calmly, and the pair succeeded to recover slightly. For euro the situation remains uncertain.

    Speaking about notable news from the U.S.A. for this day, there are practically only production activity of NY and the index of housing price NAHB. In general, forecasts are neutral and they will hardly have much influence on market’s dynamic. European statistics are of more interest today. German institute ZEW will publish its report on moods in business environment. The forecast indicates probable significant growth of confidence in the Eurozone. The question remains how players will combine it with Greek factor. Still, we presume that it’s quite possible that ZEW strong data will succeed to recover interest to euro’s purchases, and yesterday’s reaction to outcomes of the Eurogroup session will be short-term.

    Considering significant local data of today, there are data on inflation in the U.K. Recently pound has shown impressive resistance to the negative, and hints of probable increase in rates by the Bank of England give pound’s bulls confidence. If the data are above forecasts, then pound will readily continue ascending correction.

     

    Trade tactics:

    Yesterday we closed our euro’s purchase for 1.1390 after appeared messages about failed negotiations within the framework of the Eurogroup. At this moment we have no clear view of further prospects of the pair. We presume that renewal of long positions is the most preferable tactic now.

     

    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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