Been too busy to trade recently, missed a few opportunities, including (part of?) the one I just entered.
Short EUR/USD June '15 @ 1.1321. Targeting 1.09 - 1.10 short term, lower if Syriza lives up to its election promises.
I may have mis-timed as there is probably a technical bounce due, even if today and tomorrow's Eurogroup meetings don't go well; eur/usd looks a little oversold. But I don't want to try and time it perfectly, and I don't think I need to. I think upside is limited enough to withstand the pain until everyone realizes a new deal with Greece isn't going to be as easy as the last three (3! lol). There's a good possibility Greece's new leaders finally learn how to put on a good face and negotiate the way the Euros are used to. But then again...
In fact, I think the most probable scenario is being a bit underestimated: Greeks going back to the polls to vote in a new government should negotiations fail due to the German insistence of continuing the current plan, causing an accidental default and possibly Grexit. I think Germany does need to draw a line in the sand, and if they have to compromise, at most throw them a bone - allowing Greece to renegotiate will absolutely push other anti-austerity parties in Spain et al, demand the same. At the same time, I don't think Syriza is your average group of politicians; they were elected to do a certain thing and simply having a bone thrown to them won't be good enough - they may want to go back to the polls to ask the people whether they want to play with fire (i.e., actually consider leaving the Euro should negotiations fail); they don't seem to believe they have that mandate yet. Then again...
UPDATE: (15 minutes later, lol)
Talks of a bridge loan to Greece to allow for negotiation seem like the desired outcome for both sides. While Bundesbank President Weidmann said ‘the question of a bridge loan via T-bills has a precondition, in my view, that it’s not a bridge to nowhere’. he's leaving open the possibility that both sides can call it whatever they want to both avoid the day of reckoning and not look weak. I still think my view above is correct, but I think now it may need months to play out, as Greece will have the ability to avoid accidental Grexit for maybe 6 months.
Closed the trade even. Given the poor technicals and oversold positioning, and the interest both sides have in trying to make something work (the bridge loan isn't much to give up, for Germany), I think despite some resistance, it will happen. And since the euro is oversold, there's not much downside room while the bridge loan negotiations are taking place. I will revisit a Euro short on future euro strength - the dollar is likely to continue appreciating through the year with interest rates set to rise.
Short EUR/USD June '15 @ 1.1321. Targeting 1.09 - 1.10 short term, lower if Syriza lives up to its election promises.
I may have mis-timed as there is probably a technical bounce due, even if today and tomorrow's Eurogroup meetings don't go well; eur/usd looks a little oversold. But I don't want to try and time it perfectly, and I don't think I need to. I think upside is limited enough to withstand the pain until everyone realizes a new deal with Greece isn't going to be as easy as the last three (3! lol). There's a good possibility Greece's new leaders finally learn how to put on a good face and negotiate the way the Euros are used to. But then again...
In fact, I think the most probable scenario is being a bit underestimated: Greeks going back to the polls to vote in a new government should negotiations fail due to the German insistence of continuing the current plan, causing an accidental default and possibly Grexit. I think Germany does need to draw a line in the sand, and if they have to compromise, at most throw them a bone - allowing Greece to renegotiate will absolutely push other anti-austerity parties in Spain et al, demand the same. At the same time, I don't think Syriza is your average group of politicians; they were elected to do a certain thing and simply having a bone thrown to them won't be good enough - they may want to go back to the polls to ask the people whether they want to play with fire (i.e., actually consider leaving the Euro should negotiations fail); they don't seem to believe they have that mandate yet. Then again...
UPDATE: (15 minutes later, lol)
Talks of a bridge loan to Greece to allow for negotiation seem like the desired outcome for both sides. While Bundesbank President Weidmann said ‘the question of a bridge loan via T-bills has a precondition, in my view, that it’s not a bridge to nowhere’. he's leaving open the possibility that both sides can call it whatever they want to both avoid the day of reckoning and not look weak. I still think my view above is correct, but I think now it may need months to play out, as Greece will have the ability to avoid accidental Grexit for maybe 6 months.
Closed the trade even. Given the poor technicals and oversold positioning, and the interest both sides have in trying to make something work (the bridge loan isn't much to give up, for Germany), I think despite some resistance, it will happen. And since the euro is oversold, there's not much downside room while the bridge loan negotiations are taking place. I will revisit a Euro short on future euro strength - the dollar is likely to continue appreciating through the year with interest rates set to rise.
Risk Comes from not knowing what you are doing CapitalStars
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