What Happen After Greek Elections?

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(EU) Optimistic markets rallied higher after Greece pro-austerity New Democracy party won the parliament Greek elections, they are expected to create a coalition by Wednesday and secure 179 of the 300 seats. Note the Greek parliament released official election results putting the ND party at 29.7% of the votes (129 seats), and the Syriza party at 26.9% votes (71 seats).  The winning wining party is awarded extra 50-seat bonus in the parliament, making the ND party the majority with 179 seats).

Following the Greek elections, an article by the Telegraph’s Evans-Pritchard commented that Greece will eventually have to leave the EMU regardless of the results. He questioned the ability of Greek officials to meet the harsh terms of their bailout package. The issue now is how a Greek exit will be negotiated.

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(GR) German Govt spokesperson: Chancellor Merkel has assumed Greece will continue with its bailout commitments and now is NOT the time for giving discounts to Greece- EU/IMF/ECB Trioka to visit Athens and check its current status to assess next payout – Expects Troika to return to Greece in early July.

(EU) Dealers focused on Spain after weekend press report circulated that Spain PM Rajoy would not implement IMF’s latest recommendations that included cuts in govt worker wages because they were non-binding. Additionally, Spain Apr bad loan ratio hits its highest level since Apr 1994 at 8.72%. The Spanish 5-year and 10-year yields and spread against the German bund blew out to fresh EMU record levels above the 7% threshold.

How to interpret these headlines?

Market sentiment in Europe has improved dramatically this past couple of weeks as Spain is scheduled to request for a banking bailout totaling $125B and Greece gets to stay in the Euro Zone, narrowly avoided the doom and gloom scenario with the potential of an EU collapse.  Some analysts may argue that the European crisis is still on, but they will have to admit that situation has improved significantly since last week.

Therefore, moving forward, I’d be looking for potential EURO long trades based on 3 important reasons:

  1. Euro has been oversold (Market flows based on CFTC COT report showing all time high Net Euro shorts)
  2. US Fed could announce more Quantitative Easing
  3. Market is fatigued over recent Euro sells.

Obviously I’d recommend to wait for pullbacks before taking the trade.

FUNDAMENTALS
Forex Weekly Outlook May 22 ~ 26, 2017
Forex Weekly Outlook – May 15 ~ 19, 2017
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World economy risks another crash unless they continue to support growth with low interest rates: IMF
Central banks cannot keep pumping cheap credit into series of asset bubbles
About Henry Liu

My name is Henry Liu and I am a Forex Trader and Mentor. I help traders achieve consistent income trading Forex while spending less time trading. My focus in trading is a combination of Fundamental Analysis, Technical Analysis, and Market Sentiment. Far too many retail Forex traders concentrate on just one aspect of trading, technical analysis, and ignore everything else; it is my goal (and vision) to educate every trader on how to take advantage of news trading and become more balanced traders.

You can find more information about me on my Google Profile.

Comments

  1. great Henry!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

    i closed my long at 1.26995

    trusting in you.

    thank you so much!!!!

  2. At which support about you??
    You olso suggest to buy the dips… Here is continuosly move down
    Better Wait fomc?? But from news came out QE MAYBE NeXT month
    And Barroso said that euro dx is too HIGT….
    you Henry THE GREAT MASTER can Explain me the approch?
    Tank you so much for All Your hard Work

  3. Your news analysis/views have proven to be very reliable. I for one appreciate all that you do. Keep it up, one love.

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