The Weekly Update: Can Greece Really Pay?

Can Greece Really Pay?

Fitch credit rating agency slashed Greece rating on Friday at the end of the trading session. It was speculated Moody’s will take action on Greece but it appears Fitch was ahead of them. We have anticipated such actions from the rating agencies last week the downgrades do not interfere with the trades we have issued. The Greek reforms are still unaccepted due to lack of detail according to Europe and the recent downgrade mounts the pressure on the Greek  government. Greece are due to make a EUR 450 million  payment to the International Monetary Fund (IMF) but it appears at the time of this writing it is uncertain where the funds will come from. We are counting on the safe-haven flows to Gold to allow us to realize an initial profit over our long trade by the end of the week, ahead of the US Non-Farm Payrolls (NFP).

CAD and UK Stress Test Scenarios

Our prime focus remains on CAD as we were looking for an entry ahead of the weekly close but due to the speculations Europe will impose capital control measures on Greece on Friday night (27 March) or 10 April  triggered a mass rally in most EUR pairs and crosses while the commodity currencies sustained their losses. GBPCAD posted marginal gains, as a result, which prevented us from re-entering the long trade. We will patiently wait for an intraday entry to join the uptrend.

We should note a similar entry was noted in GBPAUD but we preferred GBPCAD due to swap rates. We are considering the possibility moderate gains will be noted in GBP ahead of the UK elections in May 2015. We are observing multiple GBP pairs and crossed aside GBPCAD in an attempt to find a clean, technical entry.

Focusing on a nearer term event, tomorrow Mark Carney, the chairman of the Bank of England (BOE) will reveal the scenarios in which UK banks will be tested in the upcoming stress test. The hypothetical scenarios may toughened in light of recent economic determination in China and Greece’s threat to global markets.  We will examine multiple stocks from the banking sector and may issue a trade alert during Monday’s session.

Thin marker conditions are expected as we near Good Friday. Due to the tension between Greece and Europe we may witness irregular volatility in the Foreign Exchange market.

AUDUSD

Aside the Reserve Bank of Australia (RBA) appeal for a weak currency, a AUD 1.5 billion option is located at 0.7700, set to expire on Friday. Due to the size of the option it may attract the eye of key market traders in the Forex market. We have published in our prior market research that we favour further selling in AUDUSD but have yet to have a technical confirmation for issuing a trade alert in the pair.

Key Technical Levels For This Week

Below are the key technical levels for the upcoming week based on the 4hr charts. The technical levels may be used for setting stops,  take profits and/or entry orders.

 INSTRUMENT  SUPPORT  RESISTANCE
 EURUSD  1.0865  1.0934
 GBPUSD  1.4807  1.4924
 AUDUSD  0.7725  0.7804
 EURJPY  128.95  130.50
NZDUSD  0.7542  0.7594
USDCHF  0.9547  0.9647
GBPJPY  176.70  177.71
AUDJPY  92.18  92.90
USDCAD  1.2540  1.2670
EURGBP  0.7291  0.7342