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2 Jul 2015
EUR/USD on the Greece referendum: bearish bias - BTMU
FXStreet (Guatemala) - Analysts at the Bank of Tokyo-Mitsubishi UFJ, Ltd explained that they are maintaining a wider than usual trading band for the week ahead given the crucial importance of the referendum in Greece on Sunday.
Key Quotes:
"As the referendum has been called at short notice and during exceptional economic circumstances, the outcome from the referendum remains highly uncertain. The few opinion polls have provided no clear cut signal as to which way the Greek people are likely to vote. We are assuming that the Greek public will vote “Yes” given their desire to remain within the euro-zone. However, the Greek government is campaigning for a “No” vote stressing there is no clear direct link between voting against austerity and leaving the euro-zone.
However, if there is a “No” vote it will make it even more difficult for the creditors to reach an agreement with the current Greek government. Without an agreement the ECB will remain under pressure to pull emergency financing from the Greek banks moving Greece closer towards an exit from the euro-zone placing more downward pressure on the euro.
Alternatively if the “Yes” vote prevails, the current Greek government would likely be replaced by a national unity government tasked with securing an agreement with the creditors. The euro may stage a limited relief rally although a return to relative fundamental drivers would likely see the euro soon come back under downward pressure."
Key Quotes:
"As the referendum has been called at short notice and during exceptional economic circumstances, the outcome from the referendum remains highly uncertain. The few opinion polls have provided no clear cut signal as to which way the Greek people are likely to vote. We are assuming that the Greek public will vote “Yes” given their desire to remain within the euro-zone. However, the Greek government is campaigning for a “No” vote stressing there is no clear direct link between voting against austerity and leaving the euro-zone.
However, if there is a “No” vote it will make it even more difficult for the creditors to reach an agreement with the current Greek government. Without an agreement the ECB will remain under pressure to pull emergency financing from the Greek banks moving Greece closer towards an exit from the euro-zone placing more downward pressure on the euro.
Alternatively if the “Yes” vote prevails, the current Greek government would likely be replaced by a national unity government tasked with securing an agreement with the creditors. The euro may stage a limited relief rally although a return to relative fundamental drivers would likely see the euro soon come back under downward pressure."