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9 Jul 2015
EUR/USD: weakening om prospects of a Grexit - BTMU
FXStreet (Guatemala) - Analysts at the Bank of Tokyo-Mitsubishi UFJ, Ltd explained that the euro has been weakening gradually as the likelihood of Greece defaulting and exiting the euro-zone has increased.
Key Quotes:
Recent developments including the Greek referendum result have made it more difficult for the Greek government to reach an agreement to secure financing from its creditors.
"Unless there is a significant last minute compromise it appears unlikely an agreement will be reached. Without an agreement the ECB will be under pressure to withdraw financial support for Greek banks moving Greece closer to an exit from the euro-zone."
"Even if a last minute agreement is reached some form of immediate support will required to prevent Greek banks becoming insolvent next week. If an agreement is not reached, the euro would likely come under more selling pressure early next week, and weakness could prove more persistent than in recent weeks."
"Alternatively if there is a last minute agreement the euro could stage a brief relief rally although upside would likely prove limited. For the US dollar it would likely become relatively more attractive in the event of Grexit even if Fed rate hike expectations are pared further. Alternatively, Fed rate hike expectations would likely be brought forward in the event of an agreement offering some support for the US dollar."
Key Quotes:
Recent developments including the Greek referendum result have made it more difficult for the Greek government to reach an agreement to secure financing from its creditors.
"Unless there is a significant last minute compromise it appears unlikely an agreement will be reached. Without an agreement the ECB will be under pressure to withdraw financial support for Greek banks moving Greece closer to an exit from the euro-zone."
"Even if a last minute agreement is reached some form of immediate support will required to prevent Greek banks becoming insolvent next week. If an agreement is not reached, the euro would likely come under more selling pressure early next week, and weakness could prove more persistent than in recent weeks."
"Alternatively if there is a last minute agreement the euro could stage a brief relief rally although upside would likely prove limited. For the US dollar it would likely become relatively more attractive in the event of Grexit even if Fed rate hike expectations are pared further. Alternatively, Fed rate hike expectations would likely be brought forward in the event of an agreement offering some support for the US dollar."