Derisive Comments from Greek PM Fail to Inspire EUR-crosses
- Derisive comments from Greek PM fail to inspire downside.
- See the February Forex Seasonality report and the implications for the majors.
An oversaturated net-short Euro position may be contributing to a lack of downward momentum. With speculators in the futures market holding their largest net-short position since the week ended June 5, 2012 (currently 196.3K net-short contracts; off the all-time high of 214.4K), it's going to take a great deal of emotion to entice new traders into the market.
For now, it seems markets are focusing on the ECB's negotiating tactics rather than Greece's: the decision to push Greek banks into the ELA is viewed as a way to hasten negotiations between Greece and the creditor bloc; rather than allow Greece to drag its feet in an attempt to grandstand for its electorate.
While it's pointless to peg a specific likelihood to a 'Grexit,' we must recognize that it is a tail-risk scenario that is probably shifting closer to the center of the bell curve. As it were, with global financial markets still in the perpetual 'buy the dip' mindset in risk-correlated assets, recent pressure in high yielding currencies has been quickly faded. Even as pressure mounts on the European currencies, the commodity currencies have enjoyed a stronger open to the week as traders expect the status quo to remain.
--- Written by Christopher Vecchio, Currency Strategist
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