(This is an excerpt from an article I originally published on Seeking Alpha on July 13, 2015. Click here to read the entire piece.)
“After a six-month offensive against German-inspired austerity succeeded only in deepening his country’s economic mess and antagonizing his European counterparts, there was little for Tsipras to tout as evidence of a face-saving compromise following a rancorous summit in Brussels that ran for more than 17 hours.” – Bloomberg, July 13, 2015 in “Tsipras Faces Mutiny After Capitulating to Demands“
The latest deal for Greece only sets up the conditions and constraints for the next round of negotiations – this time within Greek political bodies – but the key message is loud and clear. Greece has concluded, through Prime Minister Alexis Tsipras, that the country must stay in the euro at any cost. Without the support of the eurozone and all its financial and institutional infrastructures, Greece faces dire outcomes that appear even worse through the fog of great uncertainty in a world of drachmas.
{snip}
Source: “Tsipras Faces Mutiny After Capitulating to Demands” from Bloomberg, July 13, 2015
This machinery includes too many potential points of failure than I dare count. At any point along this timeline, headlines could send financial markets rocking from one side of sentiment to the other. {snip}
Source: FreeStockCharts.com
The chart above shows net-net that through all the drama the euro remains trapped in rangebound trading. {snip}
Interestingly, the speculative positions of traders on the euro have NOT churned with the headlines. {snip}
Source: Oanda’s CFTC’s Commitments of Traders
If I am correct in my read of speculative positioning in the context of the on-going churn of Greek debt headlines, the bias is in place for more downside for the euro whenever marginal traders decide to place their bets again.
Be careful out there!
Full disclosure: net short the euro
(This is an excerpt from an article I originally published on Seeking Alpha on July 13, 2015. Click here to read the entire piece.)