Little chance of a last minute Greece agreement – TDS

FXStreet (Barcelona) – FX Strategists at TD Securities, comment on the key risk in the FX market – Greece, and further prefer remaining long JPY into Greek uncertainty.

Key Quotes

“Greece remains in focus and now that the June 30th deadline has arrived and despite rumors of Syriza party infighting and Tsipras campaigning for a “No” vote at Sunday’s referendum, news has surfaced that the Greek PM is reconsidering a last minute offer from Juncker. The situation right now is very fluid and the newswires are very active so we caution getting caught up in the headline risk.”

“At this point, we see little chance of a last minute agreement so we expect Greece to default on its IMF payment leaving the country in a state of paralysis until the referendum vote on July 5th. Until then, markets will be watching the polls to gauge which way the vote will lean but the EU has made it clear that the vote on “the bailout” is a vote on membership within the Eurozone.”

“As we noted, even if there is a “yes” vote the outcome is not entirely clear and a period of protracted uncertainty is still in the offing while the best case situation may be a very strong “yes” vote that would then lead to Tsipras stepping down and a national unity government (pro-EU) forming to negotiate a new deal.”

“With social unrest growing, markets are trading with a softer tone but remain rather resilient. EZ peripheral spreads, though wider, are still holding in rather well suggesting contagion is still contained.”

“EURUSD is holding just under the 1.12 figure while European equities are making a modest comeback. Trading the headlines amidst the Greek drama is difficult, but in general we favor being long JPY.”

FX Strategists at TD Securities, comment on the key risk in the FX market – Greece, and further prefer remaining long JPY into Greek uncertainty.

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