Eur/usd - page 291
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Parity... soon...
EUR/USD has fallen asleep completely, but considering the events on Sunday this is like the calm before the storm.
EU Bourses Close Lower for 2nd Day as Greek Referendum Looms
Bourses on the Old Continent ended the last session of the week lower, as traders were cautious ahead of Sunday's key Greek referendum vote. Meanwhile, services PMIs for the euro zone's major economies were also eyed.
Germany's DAX 30 index ended 0.37% lower at 11,058.39, and the UK FTSE 100 closed 0.67% lower at 6,585.78.
Among the other indices, the French CAC 40 index lost 0.57% to 4,808.22, and the pan-European Euro Stoxx 50 decreased 0.63% to 3,441.32.
Equity wrap-up
European stocks ended the previous volatile session mostly lower, with investors still nervously watching Greece's negotiations with its creditors.
As for other regions, Asian stocks fell on Friday as Chinese stocks extended their plunge, and growing caution ahead of Greece's referendum prompted investors to cut risky bets, while disappointing US employment data weighed on the dollar.
US bourses were closed on Friday because of the Independence Day holiday.
Sunday eyed
On Sunday, Greeks will head to the polls to state their opinion on whether the country should accept its international creditors' demands or not. Greek officials have warned they would resign if a 'yes' outcome would prevail, while a 'no' result would increase the risk of a Grexit.
The preliminary results are expected on Sunday night or early on Monday.
Macro corner
In Spain, traders saw a reading of 56.1 points for the nation's services sector in June, a slide after 58.4 a month before, Markit Economics said, missing estimates.
For Italy, the services sector expanded by 53.4 points for June, a pick up from May's 52.5, and compared to estimates of 52.3.
The French final services PMI improved to 54.1 following 52.8 previously, matching analysts' predictions.
Germany recorded 53.8 points for its services sector, a rise from 53 posted for May, but missing estimates of 54.2, Markit said.
In the euro zone as a whole, Markit reported the services PMI at 54.4 points after 53.8, meeting analysts' estimate.
The UK's services PMI improved to 58.5 points in June, from May's 56.5, and compared to projections of 57.5.
Meanwhile, Eurostat published fresh figures for the euro area's retail sales, showing 0.2% rise on a monthly basis in May, following a stronger 0.7% gain, while a 2.4% jump was booked year-on-year. The figures topped estimates.
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Now all eyes will be on Greece market impact next week.
EUR/USD forecast for the week of July 6, 2015
The EUR/USD pair initially tried to rally during the course of the week, but as we got later through the 5 sessions, fear of the Greek situation took over again. Ultimately, we ended up forming a shooting star but quite frankly we feel that the market is well supported just below. The 1.10 level of course should be supportive based upon the large, round, psychologically significant number itself, plus the fact that it has previously been both support and resistance. On top of that, you can see that we clearly have an uptrend line that we are pressing up against. So the real question will become what happens when Greece votes on austerity?
Because of this, we think that the chart can be somewhat ignored as far as the candlestick it was formed. We think it’s only a matter of time before the Euro continues to go higher but we also recognize that volatility could send this pair lower. As far as a longer-term trading is concerned, we could go as low as 1.05, but at this point in time it would be hard to imagine breaking down below that area.
On the other hand, if this pair moves higher it should test the 1.15 level eventually. Above there, becomes more of a longer-term “buy-and-hold” type of marketplace, and therefore much easier to trade. Keep in mind, Forex pairs tend to change trend every 2 or 3 years, and as a result it would be expected to do so somewhere in this general timeframe. On top of that, the trend changes tend to be very messy. Although it’s been a real difficult pair to be involved with recently, there is nothing on this chart that is completely out of the norm, and as a result we believe someday we will all look back at this region and say, “we should have bought the Euro here.” With that being the case, we believe longer-term “smart money traders” are starting to go long already and will ride this pair much higher.
Euro Seen Falling at Open With Greek Voters Rejecting Austerity
The euro was indicated lower after early results indicated Greece’s voters rejected a bailout plan, raising the risk of an exit from the currency union that would call into question the integrity of the bloc.
With 35 percent of the votes counted in a referendum on austerity measures required in return for financial aid, “no” was ahead with 61 percent , data on the Interior Ministry website show. The euro was at $1.0980 as of 4:25 a.m. Sydney time, according to EBS, a platform run by ICAP Plc, the world’s largest interbank broker. The currency closed Friday at $1.1114.
While Greece accounts for less than 2 percent of the euro zone’s output, an exit would set a precedent for other nations that membership is reversible. The currency has been resilient amid the ebb and flow of Greek bailout talks, gaining 3.9 percent versus the dollar in the three months through June, its best quarter since 2013. That strength may now be at risk.
“Things change if there’s a ‘no’ vote and there’s a clear implication Greece will leave the euro,” Steve Barrow, head of Group-of-10 strategy at Standard Bank Group Ltd. in London, said before the vote. “Things have been fairly steady on the currency. You can’t just assume from that stability that there won’t be a reaction at a ‘no’ outcome.”
Currency markets are scheduled to officially open at 5 a.m. in Sydney.
Canceled Hedges
European ministers in Berlin to Madrid last week reiterated that a “no” to the latest proposals by creditors would complicate Greece’s route out of financial turmoil. If it fails to agree to new financing arrangements Greece may have to start printing its own currency to keep its financial system operational. On the other hand, euro-area finance ministers may start work on a third bailout agreement even after a “no” vote, two officials familiar with negotiations said last week.
The euro slipped 0.5 percent last week to close on Friday at $1.1114. It appreciated 1.5 percent in June, with strategists citing money managers canceling euro hedges as they sold stocks and bonds.
Even so, the 19-nation shared currency is 8.1 percent lower this year, after a 12 percent drop in 2014, fueled by a divergence in monetary policy between the euro area and the U.S. Before the referendum was announced, analysts saw it declining to $1.05 by year-end, according to forecasts compiled by Bloomberg.
Losses Limited
The euro’s losses may be limited as new negotiations will keep the hope of a deal between Greece and its creditors alive, according to Valentin Marinov, head of Group-of-10 currency research at Credit Agricole SA’s corporate and investment-banking unit in London.
The nation will make every effort to reach an agreement soon, Greek government spokesman Gabriel Sakellaridis said on Antenna TV after the voting ended.
“It may take months before we know the ultimate fate of Greece,” Marinov wrote in an e-mailed note. “Indications on Monday that Athens and its creditors will be returning to the negotiations table fairly soon could help contain the losses of risk-correlated currencies and, to an extent, the euro.”
One-month implied volatility, a measure of anticipated price swings in the euro-dollar exchange rate, climbed to the highest since December 2011 after the referendum was announced.
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Euro markets set for major jolt after Greek 'No', look to ECB for calm
European stock and bond markets are set to take a sharp hit on Monday after Greece voted 'No' to harsh bailout conditions, and bankers said the European Central Bank's response was now key to the extent of contagion.
Many economists, including those at U.S. banking giant JPMorgan (NYSE:JPM), reckon the outcome of Sunday's referendum will probably hasten Greece's exit from the euro.
"Although the situation is fluid, at this point Greek exit from the euro appears more likely than not," JPMorgan's Malcolm Barr told clients on Sunday evening, adding 'Grexit' was now the bank's "base case".
"'No' most likely means EMU exit," Barclays (LONDON:BARC) told its clients.
As Asia-Pacific currency trading got underway, the euro fell more than 1 percent against the U.S. dollar and more than 2 percent against Japan's yen (EURJPY=).
While currency weakness in itself won't damage the euro zone economy, the reaction of other southern euro zone government bond markets and the stock markets first thing Monday will be a better measure of the sort of shock that has been largely missing in markets through the weeks and months of the latest standoff.
As recently as Friday, many investors had assumed a 'yes' vote would win out in the end.
ECB NOW CRITICAL
The ECB's decision on whether to continue emergency funding to Greek banks - closed for the past week and enforcing capital controls on deposit withdrawals - will now be critical.
People familiar with the matter told Reuters on Sunday the ECB would continue funding at last week's restrictive levels.
But many banks said the central bank may also have to issue a statement on anti-contagion measures - perhaps holding out the possibility of accelerating or expanding its quantitative easing or bond buying program in order to calm wider markets.
Earlier on Sunday, ECB Executive Board member Benoit Coeure said the bank was prepared for all outcomes.
"The ECB has been clear that if we need to do more we will do more. We will find the necessary instruments," Coeure said at an economics conference in Aix-en-Provence, southern France.
"Our will to act in this matter should not be doubted."
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Euro recovers from lows hit on Greek ‘No’ vote
The euro regained ground on Monday, recovering from a steep overnight decline after Greeks overwhelmingly rejected conditions for a bailout package from creditors in a referendum on Sunday.
EUR/USD was last at 1.1054, off 0.51% for the day after falling to one-week lows of 1.0970 overnight.
The result of the referendum has added to doubts over Greece’s future in the euro zone and deepened a standoff with its lenders.
European officials have indicated that they will only continue to finance Greece in return for far-reaching economic reforms.
Greek Prime Minister Alexis Tsipras welcomed the outcome of the vote and said Athens was returning to negotiations with the express goal of reopening banks, which have been shut for over a week after capital controls were imposed.
Without more emergency funding from the European Central Bank, Greece's banks are facing a cash crunch within days.
The ECB was to discuss whether to maintain emergency funding for Greek banks at their current restricted level later Monday.
Euro zone leaders were expected to hold a conference on Tuesday night to discuss the aftermath of the Greek referendum.
In a surprise move Greek Finance Minister Yanis Varoufakis resigned on Monday, despite referendum results.
In a statement Varoufakis said his decision was prompted in part by “some European participants” expressing a desire for his part in any further negotiations to end.
The single currency was also weaker against the yen and the pound, with EUR/JPY last at 135.4, down 0.8% after falling as low as 133.91 earlier. EUR/GBP was at 0.7090, up from lows of 0.7056.
The euro was also slightly firmer against the Swiss franc, with EUR/CHF at 1.0420 from around 1.0357 earlier.
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German Factory Orders Fall Less Than Expected In May
Germany's factory orders decreased at a slower-than-expected pace in May, preliminary figures from Destatis showed Monday.
New orders in the manufacturing sector fell a seasonally and working-day-adjusted 0.2 percent monthly in May, in contrast to a 2.2 percent climb in April, which was revised up from a 1.4 percent growth. Economists had expected a 0.4 percent drop for the month.
Domestic orders declined 0.6 percent in May from the prior month, while foreign orders rose by 0.2 percent.
Among sectors, orders received by the capital goods sector dropped 0.8 percent in May and that for consumer goods sector went down by 1.2 percent. Meanwhile, intermediate goods sector registered an increase of 1.3 percent.
source
On Friday session the EURUSD rose and closed in the green near the high of the day on a narrow range day, creating an inside day. The Greek drama “ended” Sunday night as the referendum “no” won by a large number and the currency opened with a Gap down of 118 pips, but like the previous one on the 28 of June, todays Gap should also be closed.