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29 Jun 2015
Greek referendum & FX outlook – Scotiabank
FXStreet (Barcelona) - Eric Theoret, CFA, CMT, Currency Strategist at Scotiabank, sees widespread weakness for most currencies along with USD strength, and further shares the outlook for Forex majors.
Key Quotes
“Greek risk has escalated following the announcement of a bailout referendum scheduled for Sunday, July 5th. PM Tsipras announced the referendum with a negative advice (‘no’) after the NA close on Friday and received majority parliamentary support late Saturday. Greece has since attempted and failed (twice) to receive an extension of its programme, set to expire on June 30—the same day on which Greece’s €1.5bn IMF payment is due.”
“The ECB has decided to maintain its ELA banking sector support at Friday’s level, and the Bank of Greece has imposed capital controls with a €60 daily with-drawal limit for individuals. Banks are closed, and a bank holiday is set to continue through July 6th. The escalation of the situation has generated risk aversion, with both U.S. yields and equity futures well below their closing levels from Friday. European equity indices are showing broad weakness, and sovereign yields suggest a rise in contagion concerns.”
“For FX, we expect to see widespread weakness for most currencies along with strength for USD, JPY and CHF. Friday’s closing levels and near-term targets (over the next week) are outlined below:
USDCAD—expect a climb from Friday’s close 1.2321 to test 1.2563 the June 1 high, a rise of 2.0%.
EUR—expect a decline from Friday’s close 1.1167 to test 1.0819 the May 27 low, a fall of 3.1%.
GBP—expect a decline from Friday’s close 1.5746 to 1.5385 the June 10 open, a fall of 2.3%.
USDJPY—expect a decline from Friday’s close 123.85 to 121.56 the May 26 open, a fall of 1.8%. Risk of further decline to 119.2 would represent a fall of 3.8%.
AUD—expect a decline from Friday’s close to fresh multi-year lows, breaking the April low 0.7533, representing a decline of at least 1.6%.”
Key Quotes
“Greek risk has escalated following the announcement of a bailout referendum scheduled for Sunday, July 5th. PM Tsipras announced the referendum with a negative advice (‘no’) after the NA close on Friday and received majority parliamentary support late Saturday. Greece has since attempted and failed (twice) to receive an extension of its programme, set to expire on June 30—the same day on which Greece’s €1.5bn IMF payment is due.”
“The ECB has decided to maintain its ELA banking sector support at Friday’s level, and the Bank of Greece has imposed capital controls with a €60 daily with-drawal limit for individuals. Banks are closed, and a bank holiday is set to continue through July 6th. The escalation of the situation has generated risk aversion, with both U.S. yields and equity futures well below their closing levels from Friday. European equity indices are showing broad weakness, and sovereign yields suggest a rise in contagion concerns.”
“For FX, we expect to see widespread weakness for most currencies along with strength for USD, JPY and CHF. Friday’s closing levels and near-term targets (over the next week) are outlined below:
USDCAD—expect a climb from Friday’s close 1.2321 to test 1.2563 the June 1 high, a rise of 2.0%.
EUR—expect a decline from Friday’s close 1.1167 to test 1.0819 the May 27 low, a fall of 3.1%.
GBP—expect a decline from Friday’s close 1.5746 to 1.5385 the June 10 open, a fall of 2.3%.
USDJPY—expect a decline from Friday’s close 123.85 to 121.56 the May 26 open, a fall of 1.8%. Risk of further decline to 119.2 would represent a fall of 3.8%.
AUD—expect a decline from Friday’s close to fresh multi-year lows, breaking the April low 0.7533, representing a decline of at least 1.6%.”