Grexit or Greece Exit of the Euro Zone has once again managed its way to the top of headlines, as it was first announced by German Finance Minister Schauble on August 20 and then confirmed by PM Merkel. This event obviously has the potential to develop into a full-on risk aversion event, especially considering economic recovery in the Euro Zone area was just getting started. Let’s take a look at the timeline and the details of the third bailout announcement so that we can prepare for the future:
So there you have it, Germany called for it, Eurogroup confirmed it, and Greece admitted to it.
But will this be enough to cause a “Grexit”? Well, that is the question, isn’t it?
Regardless of whether or not Greece exits Eurozone, I believe EURUSD will suffer another sell-off as we approach mid 2014. Market is going to position ahead of this event, and with many politicians ready to do their posturing to take advantage of this event, I would not be surprised to see major sell-offs in EURUSD, although it is too early to say.
However, in the meantime, I would be focusing on Fed’s tapering as confirmation for taper would add more demand for the USD, and when you combine that with the uncertainty of Greece, you’ve got a good recipe for EURUSD sell in the short-term. As long as the recovery in the Euro Zone remains painfully slow, I believe EURUSD still is a SELL on rally play.
Third Bailout For Greece or Grexit? Dejavu?
August 26, 2013 by Leave a Comment