Price action in the major money markets has been relatively smoother over the past 24 hours after the volatile start on Monday when the major instruments reacted to the developments in Greece. Yesterday was also another key date for the Greek issue as it marked the end of the bailout program for the Greeks and everybody was focused on whether the country would be able to fulfill its payments obligations to the IMF.
Unfortunately for the troubled country they failed to make the payment, as they had already stated in the previous days, and now Greece can be considered in a state of technical default. Nothing is certain though as the IMF has the option to postpone its demands for payments for up to 5 years so nothing is lost just yet. What is important for us though is to note the price action in the markets that has calmed down as it seems that the traders are now used to this kind of developments.
The Euro traded lower yesterday but in a more technical way than expected, the currency pair came off its 1.1200 highs and attempted to test the 1.1100 area after the rally that started on Monday dawn. It seems that the currency is trading more technically than simply reacting to the news about the Greek issue and should we treat its price action that way then the momentum is pointing downwards. A successful break of the 1.1100 support will clear the path for the Euro to test the 1.1000 lows of early Sunday’s price action.
Cable remained pretty much unchanged yet for another day yesterday range-trading either way of the 1.5700 level. The pickup in price action towards higher levels that we expected didn’t really happen, the GDP report did print higher as analysts eyed before the reading but the Current Account levels deteriorated cancelling any bullish momentum.
As long as Cable remains at these levels everything is possible and today the Manufacturing PMI levels could be key in sparking some volatility. The report is expected to print higher but the level to beat in the Cable is the 1.5800 barrier which looks difficult to break at this time.
Other than that traders will be interesting to read the latest Manufacturing PMI levels from Germany and the Eurozone and the Manufacturing ISM reading from the US also today. However their main focus will remain on the Euro as the Eurogroup will convene early this morning to continue discussing the Greek issue and its ramifications on the economy.