The markets took a deed breath after pro-bailout parties won a majority in the Greek election, averting the possibility of the country’s imminent exit from the eurozone.
Official projections show that parties supporting the bailout will have enough seats to control parliament.
Forex investors viewed the Greek election as a potential turning point for Greece. As a result, the parties which broadly support the €130 billion EU/IMF aid will begin forging a new government.
EUR/USD started the week higher with a gap as the outcome of the is broadly positive.
However, there are still many problems remain unsolved; the eurozone’s fiscal problems and Spain’s rising borrowing costs.
We will see how long the optimism will last. Senior investment analyst at Colonial First State Global Asset Management, Belinda Allen said
“There’s a short-term sigh of relief. It removes the tail risk event that we were concerned about in terms of Greece leaving the European Union immediately. We all know there’s still a long and hard road ahead for Greece and the problems of Europe aren’t solved by this election”.
Now the forex market participants will focus on more important events.
Especially US monetary policy will be a principal forex trading theme.
Wednesday, investors will carefully watch FOMC meeting and Fed Chairman Ben Bernanke’s press conference. Recent economic indicators, including an unexpected rise in jobless claims last week, have fueled expectations that the Federal Reserve will signal more stimulus to counter slowing growth. Chief U.S. economist at Morgan Stanley, Vincent Reinhart said “We put high odds on them acting at the meeting. Risk management says that you act in advance of potential downdraft in activity because that could trigger” a collapse in demand that would be difficult to escape with the main policy rate at zero”
The Asian stock markets opened higher today. NIKKEI started the day at 8,723.55, previous close was 8,569.32. HANG SENG opened at 19,578.13, previous close was 19,233.94. Senior market analyst at Rakuten Securities, Masayuki Doshida said “There’ll be a definite sense of relief spreading around today, which the weaker yen against the euro will help”
EUR/USD is trading at 1.2684 by the time of typing and for today resistances are located at 1.2738 and 1.2779. Support levels are 1.2663 and 1.2589.
GBP/USD is at 1.5687. Resistance levels are located at 1.5727 and 1.5766. Supports are located at 1.5660 and 1.5590.
USD/CHF is trading at 0.9468 by the time of typing and for today resistances are located at 0.9485 and 0.9543. Support levels are 0.9444 and 0.9394.
AUD/USD is trading at 1.0101. Resistances are located at 1.0156 and 1.0183. Support levels are 1.0086 and 1.0038.
The economic calendar is light today. Canada Foreign Securities Purchases report will be released at 13:30 GMT. US NAHB Housing Market Index figures will be released at 15:00 GMT.