After the successful vote on the Greek austerity package in the Greek Parliament yesterday, attention could start to turn to the issue of high US debt and the likely ratings uncertainty should the US fail to raise its debt ceiling.
Range: 80.31 – 80.87
The market has been extremely dull and range-bound of late. However, with the market now turning its attention to the US and the scenario of a ratings downgrade if the debt ceiling can’t be raised (unlikely outcome), along with the positive risk environment from Greece, means traders could see an opportunity to buy into a weaker dollar, with Japanese exporters selling this pair for month-end rebalancing.
Range: 1.4429 – 1.4519
The Greek Parliament yesterday approved the MTFS with a 155-138 majority, which the market believes will be enough to secure the E12 billion payment from the IMF/EU next month even if today’s ‘implementation bill gets the thumbs down’. Although that scenario seems unlikely, with every MP to announce their vote then state their reasons for this vote, we can expect a long winded vote and extreme volatility can be assured. Technically Euro is breaking above the $1.4500 resistance. With market focus now turning to the US debt ceiling having to be raised to avoid a rating agency downgrade, coupled with the fact that the ECB are in a ‘strong vigilance mode’ and are expected to hike rates in July, traders are seeing rationale it seems in buying EUR/USDdips, although headline news will still dominate.
Range: 1.6050 – 1.6174
Sterling has benefited over the last 24 hours on the better ‘risk on environment‘ as developments in Greece took on a positive tone following the successful vote on the new austerity measures yesterday, which had been expected throughout the week. Sterling has however lagged the Euro rally, hence the move towards the May high of 0.9045 in EUR/GBP. With no UK data out today, GBP could be dragged around by the risk environment and month-end rebalancing flows but traders are keeping an eye on the May high in EUR/GBP for a potential break trade.