Greece gets no agreement, therefore closer to default

The EURUSD appreciated in the last two days, even if the Greek situation went through critical moments. The Eurogroup leaders met on Thursday but didn’t manage to reach a deal. Jeroen Dijsselbloem (Eurogoup chief) still believes that it’s still possible to find a solution, while Valdis Dombrovskis (European Comission vice-president) warned that Greece needs to engage seriously in negotiations. The markets were excited for a short time as the info published by Die Zeit said that European authorities are planning an agreement, even when IMF declines to partake in bailout extension (DAX rallied above 11200 points). The situation clarified when Angela Merkel said she’s not aware of any deal without the IMF.

Euro zone leaders will hold an emergency summit on Monday. Until then, the German DAX may become vulnerable to further negative correction, while the euro is still following an ascending tendency (like enjoying a Grexit).

During the FOMC Press Conference, Janet Yellen was careful in expressing her dovish position. She mentioned that a rate hike is still possible by the end of the year, but the macroeconomic data is extremely important. Furthermore, she made it clear that the moment of the first interest rate hike is not as important as the whole processes required to get the monetary policy to normal, and in the actual conditions this process may take longer than estimated. The American dollar depreciated during the conference press, but the current situation reflects a strong American currency.

The Swiss franc strengthened as the SNB announced to raise the 7-day dollar repo rate to 0.64% from 0.62%. During the conference press, SNB’s chief Thomas Jordan announce that the deposit rate is being maintained at -0.75%, the evolution of the Swiss economy since January 15 is in line with expectations and also declared that the Swiss franc is clearly overvaluated. He also said it’s risky being long of CHF as interventions are a very strong tool. Could we use the Swiss franc evolution as an indicator of the Greek situation? Of course. Any significant movement of the currency or decision to further reduce the deposit rate (or not) could warn the outcome of negotiations.

The Sterling Pound strongly appreciated recently as the MPC unanimously decided to maintain the interest rate unchanged; improvements were seen in the average earnings index and an MPC official declared that even if “we still do have some time” before rates need to rise, a change in the “not too distant future” can occur before the CPI gets to 2%. Before the ascending trend will resume, the technical signals may point to a correction.

The Japanese yen depreciates before the Kuroda’s press conference. The Bank of Japan announced to maintain its massive stimulus as it strongly believes that the inflation will increase to 2%. Traders will follow any information about possible measures of increasing the stimulus programe as Kuroda wants to make its plans more transparent.