FNP Squawk - EUR/USD (20-06-2012)

Hello everybody! What's is going on with everyone? Hope everyone is well =]

EU Union is in the bag. With much anxiety and rumors, what is EU's next course of action? Greeks, Spanish and Italians, to start off, they are the happening and fun Europeans to start with =] A non-mechanical, non-mechanical and non-systemic Europeans :P

Anyway, let's start with what I am seeing.

EUR/USD, has made a great fall ever since their crisis. A lot of talks saying EUR is picking up before and after Greeks elections. Well, after the fall to  1.2287, price indeed bounced but this bounce is going to last. 

Take a look at the daily chart, it is too early to come out with any picture. The only immediate picture that is visible is that price action as of now after the bounce looks like it is going through a "Bear Flag". Calmly creating a channel after the bounce.

Whether EUR/USD is going up or down. depends on how it breaks out of this Bear Flag. I have not been holding a position in Spot FX since 12th June 2012 but I have been doing a lot of scalping using Binary Options. Scalping is more feasible in the current market conditions unless we manage catch something in the market, there and then, spot on. The right place and the right time, go for it. If not, stay with scalping. Discipline is the key to get out of from month of June with a good number.

Yen Gains Versus Peers Before Italy Debt Sale

The yen climbed against all of its major counterparts amid concern the bailout of Spain’s banks will move Italy to the forefront of the debt crisis, spurring demand for the Japanese currency as a haven.

The 17-nation euro remained lower versus the dollar following a three-day slide before Italy auctions debt this week and Greeks vote in a general election on June 17. The euro climbed early yesterday after Spain asked European governments for as much as 100 billion euros ($125 billion) to save its banking system, making it the fourth member of the currency bloc to seek a rescue.

“There is no conviction and there is no belief that things are going to get better” in the euro region, said Kurt Magnus, executive director of currency sales in Sydney at Nomura Holdings Inc., Japan’s biggest brokerage. “This is the reason we’re seeing the U.S. dollar and yen so well bid.”

The yen climbed 0.3 percent to 98.86 per euro as of 10 a.m. in Tokyo from the close in New York yesterday. It gained 0.3 percent to 79.20 against the dollar. The euro traded at $1.2483 after falling 0.3 percent to $1.2482 yesterday.

Italy’s 10-year debt dropped yesterday as the yields climbed 26 basis points, the most since Dec. 8, to 6.03 percent. The nation is scheduled to auction securities on June 14 maturing in 2015, 2019 and 2020.
Italian banks led a decline in European stocks yesterday, with UniCredit SpA (UCG), the country’s largest lender, losing 8.8 percent and Intesa Sanpaolo SpA (ISP), the second largest, sliding 5.9 percent. The nation’s debt load is the heaviest in the euro region after Greece’s, as measured by its ratio to annual economic output, according to data compiled by Bloomberg.

Euro Rises to Two-Week High on Spain Bailout Request

The euro rose against most of its major counterparts after European governments agreed to provide Spain with a bailout loan.

The 17-nation currency climbed to a two-week high after Spain asked for as much as 100 billion euros ($126 billion) to save its banking system, making it the fourth member in the currency bloc to seek a rescue. The dollar and yen fell on decreased demand for refuge assets as Asian shares rallied.

The euro reached $1.2671, the highest since May 23, before trading at $1.2631 as of 1:36 p.m. in Tokyo, 0.9 percent higher than the June 8 close in New York. It jumped 1.1 percent to 100.59 yen. The dollar added 0.2 percent to 79.64 yen.

The MSCI Asia Pacific Index of shares advanced 1.8 percent.

Seven months after winning a landslide victory, Spanish Prime Minister Mariano Rajoy was forced to abandon his bid to recapitalize banks without external help. Foreign investors had cut holdings of the nation’s debt amid concern banks’ bad loans may overwhelm public finances, driving borrowing costs to near euro-era records.

Futures traders had increased their bearish bets on the euro to an unprecedented level, according to figures from the Washington-based Commodity Futures Trading Commission. The difference in the number of wagers by hedge funds and other large speculators on a decline in the euro, so-called net shorts, compared with those on a gain was 214,418 on June 5, the most on record going back to 1999.

“The growth outlook for most of the euro area is already bleak,” Guillermo Felices, head of European currency strategy in London at Barclays Plc, and Yuki Sakasai, a New York-based currency strategist, wrote in a research note. “One way to spur growth would be the ECB easing to weaken the euro. Otherwise, without growth, the euro will remain under pressure.”

Euro Strength Seen by Stiglitz Removing Greek Debt

Rather than a euro failure, an orderly Greek exit from the currency has Nobel laureate Joseph Stiglitz and Nomura Holdings Inc. chief strategist Jens Nordvig predicting a stronger and more stable monetary union.

While Societe Generale SA suggests that the euro might break up because of the cost of Greece’s departure, the nation accounts for just 2.3 percent of the 17-nation trading bloc’s gross domestic product. It also has 356 billion euros ($450 billion), or 4.3 percent of the region’s total debt, according to data compiled by Bloomberg. The area’s trade deficit last year would have been a surplus without its weakest member, according to European Union data.

Foreign-exchange markets display little evidence of the euro being dismembered. The currency trades 53 percent above its record low of 82.30 U.S. cents in October 2000. Bond yields of Austria, Belgium, Finland, France, Germany and the Netherlands have fallen to record lows, as investor demand for their debt increases. Removing Greece from the euro would reduce the bloc’s debt-to-GDP ratio to 85.5 percent from 87.3 percent.