Greece unease building, EUR weakness ahead – BTMU

FXStreet (Barcelona) - Derek Halpenny, European Head of GMR at Bank of Tokyo-Mitsubishi UFJ, shares the key developments surrounding the Greece bailout scenario, noting that the higher squeeze in EUR/USD stands limited in front of the Greek uncertainty.

Key Quotes

“The euro versus the dollar has held on to recent advances fuelled by the continued weakness of US data but remains vulnerable to the continued brinkmanship between Greece and the EU.”

“The unconfirmed/rumoured request by Greece to the IMF to ask for a delay to repayments prompted a response from IMF Head Lagarde who stressed that such a scenario would be impossible to agree. If the request was made it certainly highlights the approaching deadline and risks that Greece runs out of funds.”

“Finance Minister Varoufakis also stated that Greece would not continue the deception of “Ponzi austerity’ accusing the EU of “liquidity asphyxiation”. He appeared to suggest that the EU’s agenda was to try and remove Syriza from office and that this attempt would fail.”

“The squeeze higher in EUR/USD will not go very far with this huge issue lingering over the market. The saga moves to the US now with Varoufakis in Washington and due to meet President Obama and US Treasury Secretary Lew.”

“If progress fails to materialise at the finance ministers meeting in Riga next Friday then the markets are likely to focus a lot more on this risk, which could see the euro fall hard.”