Intraday Market Thoughts

Greece Strikes Deal, BOCs Carney to Lead BoE

by Adam Button
Nov 27, 2012 0:07

Greece has reached a deal with its financial backers to cut its debt burden. The Bank of England stunned markets by appointing Mark Carney as the first foreign Governor in its 308-year history. The yen rebounded and was the top performer while the commodity currencies lagged in mild risk-off trading. EURUSD hits 1.30. Both GBPUSD hit all targets (two weeks in a row both cable longs hit their targets). AUDUSD long was unfilled (missed by 20 pips). 1 EURJPY long hit all targets, the other was unfilled. CADJPY long remains in progress, while both EURGBP finally hit all targets, which were in progress since Nov 14.

Eurozone ministers and the IMF hammered out a deal to release the latest aid tranche for Greece, which they say will reduce debt to 124% of GDP by 2020. The euro bumped above 1.30 as details of the plan emerged -- which include lower interest rates, a debt buyback, a maturity extension and the return of some accrued interest on debt held by the ECB.

Few market participants believe that the debt targets are achievable but the deal diminishes near-term uncertainty about Greece. Market sentiment is likely to improve so long as it doesnt lead to a fresh emphasis on Spain, where separatists who Catalonia's regional election on the weekend.

As markets waited for the Greek decision, the surprise BOE announcement added drama to an otherwise underwhelming trading day. Carney will stay on at the Bank of Canada until June and instantly lends experience and credibility to the BOE.

The search now begins for a BOC Governor, with Deputy Tiff Macklem seen as a favorite. Carney had maintained a hawkish tilt at the BOC and his replacement could shift to a more neutral stance, which would hurt the Canadian dollar.

One gold short stopped out, the other a new contingency long was filled and in progress. The long silver trade since Nov 7 finally hit its highest target of 33.90. The lone long in oil is in progress. For DIRECT ACCESS to these trades and the relevant charts, click here: NonSubscribers Can click here to join:



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