Another week and another Greek election result. The Syriza party, led by Alexis Tsipras enters a coalition with the Independent Greeks Party. Surprising result? Let’s just say not as surprising as the Japanese victory over South Africa on Saturday.
We’re drifting in that no man’s range at present. Up to 1.40 or down to 1.35? I would say moves to the downside are more likely. We are limited on UK news this week so any moves will be dictated by the Euro. Is some kind of calm coming to the Greek situation? With 35.5% of the vote it could be argued that Tsipras now has a strong political will and endorsement to continue to compromise with European creditors and maintain Greece’s Eurozone inclusion. Should we see continued improvement in negotiating and relations then further debt relief is likely. I think we all know it is a matter of time before some of the Greek debt is written off. I think we will see a rebound in the Euro over the next six months as some kind of calm returns to European stocks and markets.
What does that mean short-term? If you’re a Euro buyer I would look at 1.3750/1.38 as levels to execute. Please contact myself or one of the trading team to discuss implementing a market order. If you are a Euro seller I would look at levels at 1.37 this week to convert Euro’s into Sterling. These are realistic levels to aim for. There will of course be spikes and dips on an intraday basis although with a relatively light data calendar I think we’ll see a gradual drift lower this week.
We’re back to the dizzy heights of around 1.55. Will we see the US Dollar regain the ascendency after dovish comments from Janet Yellen and the Fed last week? I still think we’ll see Cable push lower. Why? We’re now back to the game of “who can push their currency the lowest”. I think the Bank of England would be apprehensive of pushing rates higher and therefore pushing Sterling higher. Markets will remain risk averse and we may see the US Dollar strengthen due to a higher demand for treasuries as the tone turns back to one of safety for the time being. So, what do you do if you are a US Dollar buyer from Sterling? If you can achieve 1.55 on a market order I would suggest that is a good level to achieve. Also, it’s a nice round number from an accounting perspective! Should you have some time the next level I would aim for is 1.56. We’ve encountered some resistance on the push higher so it may be challenging to reach. Please contact me or one of the trading team to discuss implementing an order. If you are a USD seller I would look at 1.5450/1.54/1.5350 to the downside to execute at.
Strategy for Q4
With the last quarter coming into play it is a good time to have a discussion with one of the team at Aston to put a strategy in place for the last few months of 2015. Feel free to call myself or our Head of Trading and we can put a plan in place together so we mitigate any currency risk whilst leaving you room for upside potential.
If you have any questions in the interim or would like to schedule a call to discuss your individual requirements please let me know and we can put something in the diary.
Have a great week
Written by Liam Alexander