Greece 20 Cash
We’ve seen the Eurosceptic parties poll rather well, gaining a larger share of representation in the EU parliament. While this was always expected, it seems the degree to which they picked up seats was above expectations. In Greece the anti-EU party Syriza polled more votes than the current ruling coalition New Democracy and thus we have subsequently seen Syriza leader Alexis Tsipras saying the election sent a message against austerity and that snap elections are necessary. This could be hugely significant as a snap election would hold the premise to a spike in volatility, with fears of Greek exit surfacing again. The Greek bond market will be a guide.
At 1.3626, I feel the EUR has priced in a fair bit of news around the June 5 meeting, with negative deposit rates being talked about again by ECB member Coeure on Friday. With the pair closing below the 200-day moving average on Friday, it feels like rallies will be sold into. Mario Draghi will be on speaking tonight at the first ECB Forum titled ‘Monetary Policy in a changing financial landscape’. With a number of other ECB officials and key note economists due to speak this meeting could get some attention.
I will look AUD/USD for this week’s ‘one to watch’ and with the technicals starting to break down I will look a selling rallies in the pair.
I like the price action in Bendigo and Adelaide Bank, however from a pure trend perspective CBA looks really strong. Shorting is no advised at present, although there some signs that a reversal could be on the cards, with negative divergence seen between price and the stochastic on the daily chart. Expect new highs today.