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The Greek Referendum
The Greek referendum has began at 04:00am GMT and will end at 16:00 GMT. Greece will decide whether it wishes to accept a deal with its creditors, which will prevent the country from defaulting on its debts. A deal with Europe (YES vote) means tougher economic reforms and possibly a new bailout package as according to the International Monetary Fund (IMF) it may be required (over EUR 60 million) to keep Greece afloat. In addition, the IMF has demanded Alexis Tsipras must resign, which means new parliamentary elections in Greece.
A NO vote could very well mean Greece may be forced to exit the Euro although Tsipras insisted Greece has no desire to make an exit and a deal should be negotiated. We must wonder how the IMF will act if Tsipras is re-elected but we will discuss this if parliamentary elections do take place.
Greece Referendum Latest Polls
Traders from all over the world will be paying close attention to the exit polls of the referendum and the final results of the vote. The exit polls will be released at 16:00 GMT (approx.). The first estimation of the final results is expected to be released at approximately 19:00 GMT. According to Alco referendum poll, the YES camp earns 41.7% of the votes while the NO camp garners 41.1% of the votes. Another poll, conducted by AVGI newspaper gave the NO camp 43.0% and the YES camp 42.5%. The votes appear to be tie according to the latest polls and we must wonder if the final results are neck-to-neck whether a second referendum will be required.
We must highlight that although the voting is expected to end at 16:00 GMT, the time may extended by 2 hours according to the Greek law.
A request was made to the Supreme Court of Greece to cancel the referendum as it may violate the Greek constitution. The request has been rejected by the court.
YES Vote Impact on EURUSD
As we discussed earlier, YES to a deal means the current Greek government must resign and snap elections are likely to take place. While the news may result in a bullish gap in EURUSD, we are uncertain the gains will not be corrected as new elections may trigger tension in global markets.
No Vote Impact on EURUSD
A NO vote may mean a bearish gap in most EUR pairs and crosses in the Forex market. A NO vote may not necessarily mean Greece will be forced out the Euro despite the IMF threats. These threats had to made to ensure Spain and Portugal will not ‘rebel’ against their deal and demand haircuts or improved terms. A statement made the German Finance Minister over the weekend that a NO vote means Greece will be ‘temporarily’ without the Euro may have tilted more votes to the NO camp. We are certain this remark was made to prevent a meltdown in global markets if the final results are negative for a deal with Europe.
However, what could in fact shift the bearish sentiment as a result of a NO vote is the intervention of the European Central Bank (ECB). Should the central bank unfreeze the Emergency Liquidity Assistance (ELA) and provide Greek banks with liquidity despite a NO vote, EURUSD is more than likely to gap higher.
Greece Referendum Speculations
In a scenario where the ECB does not intervene to aid Greece, there are speculations (although they have been firmly denied) that Greece will employ an bail-in as Cyprus was forced several years ago. Based on the speculation, a haircut of 30% will be made on bank accounts that are held in Greece that have more than EUR 8,000. If a haircut will take place on Greek deposits we are uncertain how the market will react. It may be positively viewed as Greece has the required capital to sustain itself, which could in fact strengthen the Euro in the Forex market.
We have already issued a warning to all our subscribers several months ago to consider pulling their capital out of Greek banks.
Greece Referendum Forecast
We have issued 2 trade alerts at the beginning of last week, long EURUSD and long EURJPY. We have closed our Euro yen trade with a decent profit while we have liquidated 90% of Euro Dollar long position with a decent profit. From a technical angle it appears EURUSD uptrend is expected to continue. As it is possible for EURUSD to gap higher in either scenario as we stressed earlier we are uncertain what to expect. If we must provide an expectation we would expect the NO camp to win the votes by a minor majority due to the German Finance Minister remarks that we mentioned earlier.
UPDATE 18:57 GMT
The NO camp has the lead according to exit polls as we have anticipated. The Eurogroup is expected to hold a teleconference call on Monday to discuss the final results of the Greek referendum. Tsipras has called for an emergency meeting to discuss the Greek bank liquidity problems. If are waiting for the ECB’s remarks on the referendum and whether it will provide liquidity to Greek banks to prevent a financial meltdown.
Trade Alerts Issued
We have issued trade alerts in our weekly update in the Foreign Exchange market based on the referendum final results.