The Swiss National Bank has confirmed it engaged in a currency intervention yesterday in EURCHF as the bank sees CHF being too expensive versus EUR (EURCHF being too low). This supported both EURCHF and to certain degree other EUR pairs in yesterday’s trading. As a result EURUSD moved through the resistance level at1.1130 and spike up to 1.1278 before falling down again. As per EURUSD futures today’s trading has been careful with light volumes after yesterday’s strong volatility. Strong movement higher from a support suggests that there is further upside ahead in EURUSD. I am seeing intraday support between 1.1110 and 1.1140 while significant daily support and resistance levels are at 1.1006 and 1.1292.
According to ECB’s Coeure Grexit can no longer be excluded. The executive board member said in France’s les Echos that a Greek exit from the Eurozone can unfortunately no longer be excluded, even if the ECB and Eurozone institutions want Greece to stay. Coeure said the European proposals gave Greece time and autonomy to take reform steps, adding that it was Greece’s decision to end the negotiations. Coerue also said that a “No” in the referendum would make it very difficult to continue the political dialogue.
Many commentators are now asking what Greece will be voting on this Sunday. For EU Commission President, the July 5 referendum will be a vote on Greece’s future in Europe, for the Greek opposition it is a vote on EMU membership, but for Tsipras and Syriza it is a way to change bailout terms. The Greek government is still selling a “No” to the creditor’s bailout offer as a chance to get improved conditions, but in reality, the offer will likely no longer be on the table on July 5 and without a bailout program in place the ECB will have difficulties defending its ongoing ELA assistance, which effectively turns it into a lender of last resort and the financier of the Greek government, something the Eurozone treaties clearly rule out. For now Draghi just decided to freeze the amount of ELA, but with the bailout program running out tomorrow, the ECB’s review of the situation on Wednesday could not only end re-financing for Greek banks, but also the Greek government, at least within the Eurozone system.
Yesterday US Dallas Fed manufacturing index improved to -7.0 in June after falling to -20.8 in May. This is a 6th consecutive month that the regional index has been in contractionary territory (below zero), which is mainly a function of the recession in the oil sector. US pending home sales rose 0.9% to 112.6 in May, it’s a 5th straight monthly gain, from a revised 2.7% increase April to 111.6 (was 112.4). Regionally, sales were up in the Northeast (6.3%) and West (2.2%), but lower in the Midwest (-0.6%) and South (-0.8%). Compared to last year, sales are up 8.3% y/y from 12.6% y/y.
Currency Pairs, Grouped Performance
All currencies have been losing ground against the JPY today as EUR has been falling against everything else but weak NZD. This speaks of need to find a safe haven. With GBP and AUD having mixed performances EUR uncertainty and a need safe haven definitely are the main themes for today. The way to participate in this action is to trade EURJPY which is down by over 1.20% at the time of writing.
The biggest movers at the time of writing are NZDUSD, EURJPY, GBPNZD, AUDNZD, NZDJPY.
Significant daily support and resistance levels for these pairs are:
Main Macro Events Today