EURUSD moves back toward unchanged as situation in Greece remains fluid

With the Greek austerity plan voted on, the next focus will be the rubber stamping of the implimentation (tomorrow) and the EU/IMF funding on Sunday. There is little reason to expect any other outcome. The bond restructuring plan is another can of worms, however, with French Plans coming under more criticism of late. Let’s face it, the situation in Greece is complex with tentacles that extend out. As a result of the uncertainty, one would expect that the EURUSD would come under pressure. However, in order for that to come to fruition, the focus must remain on the hurdles in the EU that lie ahead. The fundamental influence that can reverse the bias would be if a credible solution is found (and/or the market believes it) and if things like the US debt extension has problems. Time is ticking for that so it can override the EU issues if it is allowed to happen.

The other thing known is that the risk is increased in these fluid times. As a result, moves like we saw in the EURUSD this morning on the back of 1 vote by a Greek parliamentary member when the EURUSD lost 100 pips in less than a minute, could be more frequent. Be aware. Be prepared. Watch the chart levels.

From a technical perspective, the pair tested a trendline on the hourly chart at the 1.4350 level (low since the vote was sealed) and will be the short term level I will be watching today for support. A break of that level should solicit additional selling with the 1.4327 low (was a key ceiling yesterday) being the next key level to eye. If the EURUSD is going to go lower, it must get through these two key levels. Otherwise, in the absence of a break the bias today will remain more supportive in the pair.

US Pending Home Sales Soar, Best Rate Since November

Pending Home Sales (MoM):    Survey:  3.0%    Actual: 8.2%    Prior:  -11.6%    Revised: -11.3

May vs. April 2011
Seasonally Adjusted(MoM%)
U.S: 8.2% vs  -11.3%
Northeast:  7.3% vs 1.7%
Midwest:  10.5% vs -9.4%
South:  4.1% vs -17.2%
West: 12.9% vs  -8.9%

Level Change
U.S:  6.7 vs  -10.5
Northeast: 4.7 vs  1.1
Midwest: 7.9 vs -7.8
South:  3.7  vs -19.0
West:  11.5 vs -8.7

Unadjusted (YoY%) Change
U.S:  15.5% vs -26.6%
Northeast: 8.4% vs -30.8
Midwest: 20.7% vs -28.9%
South: 16.0% vs -26.7%
West: 14.9% vs -19.9%

Level Change
U.S:  88.8 vs  82.1
Northeast: 69.2 vs 64.5
Midwest: 82.8  vs 74.9
South: 95.0 vs 91.3
West:  100.6 vs  89.1

Pending Home Sales (YoY):      Actual: 15.5%      Prior:  -26.8   Revised: -26.6

Vote passed by the Greek Parliament

The EURUSD has maintained the price below 1.4442 level.

SNB, ECB, BOC, FED and BOE extend dollar swap arrangements for 1 year

This was expected.

The vote is looking like a “Yes” for austerity

The EURUSD is back near the highs.

Ruling Party Deputy votes against the austerity package. Sends the EURUSD sharply lower on the headline

Sends the EURUSD sharply lower. The EURUSD reached a low in the 1.4320 region.

The overall vote is very tight with the expectations of a close vote but passing by a few votes. 151 votes for are needed to pass.

Sources: Backers of French Plan feel it will not trigger a credit default swap event

The markets are concerned that a trigger of default would have repurcussions from off balance sheet products like CDS.

The Greek vote is expected to start in 20 minutes

This is earlier than expected it seems.   The market risk is increased. Expect increased volatility and perhaps a relief rally on a passage. From there, expect to see more violence in the streets and focus will turn to the next phases including restructuring of the Greek debt.