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FxProUpdates

EUR Trading Risk Update

EUR markets have been shaky this week, but we have yet to experience the kind of turbulence that many expect, given the gravity of the Greek situation. The EUR opened some 160 pips lower on Monday, but quickly retraced to fill that gap and even rose beyond its Friday close. It would appear that markets are having a hard time pricing-in such unprecedented events. Greece's missed loan repayment of 1.6 billion to the IMF yesterday. Along with the scheduled referendum on Sunday, ATM runs, capital ...

Simon Smith

Shaking off Greece

Yesterday showed that there is no second guessing events in Greece. There was no surprise to see the IMF deadline passing without payment, although Greece did put in a request for a last minute new deal, which was quickly rejected by Germany. That said, there will be a conference call today between Eurozone Finance Ministers, but hopes are not high for progress ahead of the weekend's referendum. In markets, there was a sense of stability yesterday, with peripheral bond yields falling modestly ...

Simon Smith

The message beyond FX

The single currency slowly but surely closed the opening gap yesterday. But make no mistake, this does not mean that markets are ambivalent towards the fate of Greece; it’s more the nature of spot FX. Looking elsewhere, such as the FX options market, together with equities, peripheral bond markets (Spain, Italy) and also safe haven assets (e.g. German bonds), all the signs are that the concern remains. Today, Greece is expected not to repay the EUR 1.5bln owed to the IMF. This is not a default, ...

Simon Smith

Risk aversion dominates after Greece

The Euro’s opening gap lower at the start of the Asian session is steadily being filled, with around half done so far. At the lows, the euro was 1.9% lower vs. Friday’s closing levels, but currently funds itself around 0.8% weaker vs. the dollar. You can find more on the weekend developments and the implications in our blog (“The single currency is to blame”). The situation is that the Greek financial system is half-frozen, with the stock market closed, together with banks. For the following ...

FxProUpdates

EUR High Volatility Alert 3

FxPro would like to inform you that all accounts are subject to normal trading conditions except our fixed spread accounts that shall be limited to 'close' only until spreads normalise. Kindly note however the above are subject to change and we shall notify you should this be the case.

FxProUpdates

EUR High Volatility Alert 2

With Greece's uncertain future in the Eurozone continuing to dominate the headlines, we would like to inform you that we are doing everything in our power to reduce the risk of trading EUR pairs. In order to provide a safeguard against a highly volatile market open, trading on EUR pairs may be subject to increased margin requirements. This depends on the outcome of today's decisive Eurogroup meeting, and how the situation in Greece unfolds over the rest of the weekend. Please be advised that, ...

FxProUpdates

EUR High Volatility Alert

Due to the ongoing uncertainty surrounding a possible Grexit from the Eurozone, we would like to warn you that high volatility on EUR pairs is becoming increasingly likely. All clients should be aware that as we move closer to a possible Grexit, the likelihood of markets opening on Monday with gaps, severe volatility, widened spreads and thin liquidity increases. Indeed, such market conditions are possible even before market close tonight. As a result, we think it prudent to advise you of the ...

Angus Campbell

Is political will going to save Greece?

Another day passes with no deal on Greece and investors are likely to want to position themselves for negotiations to go on into the weekend by reducing exposure to risk assets. Indices are a little softer on the open and the euro is offered as we see yet another classic situation when it comes to the Eurozone with things going down to the wire. Investors however remain optimistic that a deal will be struck ahead of next week's IMF payment deadline throwing Greece yet another lifeline. If the ...

Angus Campbell

IMF’s red pen

Risk assets had their shine taken off them after investors were given a stark reminder that a deal is yet to be done and Greece’s proposals from last Sunday are subject to considerable scrutiny. The IMF had the red pen out yesterday as it made its amends to much of the pension reforms put forward and the knock back has led to further strong language from the Greek prime minister, a reaction that is unlikely to improve relations with the country’s creditors and a risky stance to take at such a ...

Angus Campbell

Dollar could receive boost from GDP

The dollar was given a boost yesterday after Fed voting member Jerome Powell spoke of his preference for a September rate hike by the FOMC and even two hikes this year. This hawkish stance saw the dollar index spike, knocking EURUSD which dipped back below 1.1200 although the euro has fought back overnight and is trading at 1.1210 this morning. The dollar will be tested today with the release of Q1 GDP data which is expected to be revised upwards from previous readings, with market expectations ...

Angus Campbell

Deal or no deal

So Greece has finally presented the EU with reform proposals that were welcomed and there was a great deal of optimism as yesterday’s trading session saw a surge in risk appetite. That risk appetite is set to continue this morning with European equities looking to add to yesterday’s gains as clear political will power looks set to save Greece from default and a nasty exit from the euro, for the summer at least. It doesn’t look like Greece will receive any further debt relief, but their ...

Angus Campbell

Greece’s day of reckoning

The ECB stepped in once again to help prop up Greek banks last Friday with an exceptional round of Emergency Liquidity Assistance funding as a record amount of euros were withdrawn from the Greek banking system. This may not however be enough to stem the exodus as today’s crunch summit gets underway to try and end the impasse. It is estimated that not much over €100 billion is deposited in Greek banks, well under half of what they were at the height of the banking crisis seven years ago and ...

Simon Smith

The next stage for Greece

Expectations were set very low going into yesterday's meeting of Eurozone finance ministers and rightly so, with no agreement and nothing in sight. The next move is a higher level summit organised for Monday. The ECB also meets again today to discuss the solvency of the banking sector, with talk on the periphery of potentials issues arising next week. We've already seen substantial deposit outflows, with the doors being kept open by the (increasing) provision of emergency liquidity assistance ...

Simon Smith

Standoff

Once again, the consensus for the first rate hike from the FOMC has slipped further into the distance as the Fed Chair gave a dovish tone at the post-FOMC meeting press conference. The first move remains conditional on further improvement in the labour market and when the Fed is “reasonably confident that inflation will move back to its 2% objective”. There was also an emphasis that the rate moves would be more gradual when they do come about. The dollar was weaker as a result, with EURUSD ...

Angus Campbell

FOMC to determine next step for dollar

The two day FOMC meeting concludes this evening with their interest rate decision and this time their quarterly economic projections will see an update to the famous dot chart. A great deal of attention has been placed on when the tightening cycle will start and it wasn’t too long ago that many were expecting tonight to mark the first rate hike, however the Fed is trying to shift the market’s focus onto the tightening cycle as a whole, which means not just when it will start, but when and where ...

Simon Smith

Sterling on the up

As markets await the Fed decision and statement tomorrow evening, the main distraction for today will be the release of CPI data in the UK. The April numbers showed the headline rate falling into negative territory. Whilst in some respects this does follow a trend seen in several other European countries, the prices declines in the UK have proven to be concentrated in a narrow band of sectors. A fair proportion of the fall in the headline rate last month was driven by air fares, which prove to ...