The Greek saga isnt quite over yet

Ok OK, so the europeans finally got around to agreeing on a backstop for Greece but I think the damage has well and truely been done. Firstly, the backstop will only be used if Greece really needs it, that is to say that only  if Greece is unable (dosn´t count not paying up for funds) to raise funds in the capital markets will the package be implemented. Secondly, the fact that the IMF is involved at all really does paint the whole Euro monetary union in a dark light.

With the backstop in place and Mr. Trichet revoking his very,very bad jibe, we have seen the more riskier Euro hedge trades being reversed as you could see in the likes of Eur/Aud, Eur/Cad, Eur/Gbp etc...One trade that may be of interest is Eur/Chf carry trade , whereby investors will borrow CHF and buy Greek t-bills and bonds openning up a fairly hefty 5+% carry. It will be interesting to see the  next Greek bond auction.

Technically speaking I think that we will see a retracement in the majors vs the Dollar today with short Eur and Chf coverring , the smaller dollars will be very much influenced by their Yen and Euro crosses so probably good to stay away from at the moment. As far a Yen crosses go the bid tone is still present although I will be watching the stocks and the US 10 year notes ZNM0 for signs that a reversal may unfold.

One trade worth a look is the Cad/Chf short trade on a break and close under the channel support and
the 4 hrly 200 lwma. We now have a triple top in place at 1.0516 with 1.0336 the next level of support under the ma. Initial stop would be at 1.0460 or with a close back above the ma.


More musings a little later.