Wednesday 29/06/2011 19:39
Greece remained in the headlines last week...
Greece remained in the headlines last week as the government survived the confidence vote, as it was expected, but only with a slim majority putting some pressure on the euro which ended the week around 1 figure lower after nervous and choppy trading. Eurozone officials decided to back the next aid package to Greece as long as the austerity measures are enforced. The Fed kept rates constant as expected but in its statement sounded less optimistic on growth going forward but reaction from the market was muted.
Economic data on both sides of the Atlantic were generally disappointing with some exceptions but again traders focus was elsewhere. The Swiss franc was the star performer, yet again last week, with eur/chf reaching another all time low at 1.1845 before a small bounce as the Swiss currency seems the safest best amongst all this turbulent markets. The Swiss National Bank does not seem worried about the franc’s strength yet although some traders believe that intervention is imminent.
Data & Week Ahead
It all comes down to today’s vote in the Greek parliament around noon and despite the clashes between demonstrators and the police in Athens’ squares the austerity measures should pass. This should probably give a strong boost to euro across the board with eur/chf being the most likely candidate for a sharp rebound as the fears of a Greek default would ease; at least for the time being. The opposite scenario, which seems very unlikely, would make the euro bulls run for the exits and may signal the start for another downtrend for the euro against most major pairs.
On the data front the only other important release on Wednesday is US pending home sales which should be much higher at 2.4% from -11.6%. A busier day on Thursday with the UK consumer confidence expected lower at -23 from -21 together with the Nationwide house price index (0.1% from 0.3%. German retail sales should be higher at 0.7% from 0.3% while the German unemployment change should worsen to -17k from -8k. US jobless claims are expected lower at 424k from 429k. On Friday, manufacturing PMI in the UK could rise to 52.3 from 52.1 while unemployment rate in the Eurozone should be steady at 9.9%. ISM manufacturing PMI in the US is expected lower at 51.9 from 53.5
EUR/CHF Daily chart
Although we are in a very strong downtrend, eur/chf could be the pair to gain the most from a positive outcome in today’s vote. Should that be the case, the pair could easily reach 1.2150 and a break there would open the way to 1.2420 (major resistance).
EUR/USD Daily chart
A positive vote tomorrow could push the pair to break above the triangle bringing 1.4700 into focus again.
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