FXStreet (Edinburgh) – Jane Foley, Senior Currency Strategist at Rabobank, assessed the very near term scenarios for the main currencies in light of the recent Greek events.
Key Quotes
“The scheduling of a meeting between Chancellor Merkel and President Hollande today, an ECB conference call and a last minute Eurozone leaders summit on Tuesday is testament to the precariousness of the Greek situation”.
“The implications for the EUR are far from straight forward. The fact that many investors have turned to Bunds as a safe haven has limited the downside pressure on the EUR. Some of these investors likely maintain the view that any breakdown of EMU would likely see core European countries retaining the EUR which would then likely be stronger without its weakest members. This scenario is clearly not without many permutations and combination itself, though it is being widely touted as a reason for recent EUR resilience”.
“All of these uncertainties are likely to have a negative impact on confidence and investment decisions within the Eurozone. Oil prices have come under additional pressure from Eurozone growth concerns in addition to signs that resolution with Iran over its nuclear programme could be close. Concerns over Chinese growth have been adding to the pressures on commodities prices and we see risk of rates cuts from the RBA, BoC and RBNZ going forward. Amid this backdrop we expect the JPY, the USD and the GBP to be favoured over the next couple of days”.
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