This week's chart of EURUSD really speaks for itself. Far from being a crisis on the verge of resolution, the tremors throughout financial markets and pictures of fatal riots in Athens tell an altogether more alarming story. Whilst the German parliamentary vote on Greece's bailout package is not due until tomorrow, the markets today will be preoccupied with the scheduled ECB press conference; and one wonders how even Trichet, the master of measured rhetoric, will be able to window-dress this current situation without exacerbating Eurozone fears or sacrificing his and the ECB's credibility. What's for sure is that the ECB are not going to be hiking rates anytime soon, and it's exceedingly unlikely we get hawkish commentary the pre-prepared statement; but for currency markets it is what will come in the unprepared Q&A section of the press conference that will be the Sword of Damocles for EURUSD. The ECB President can expect tough questions about the recent decision to indefinitely suspend the minimum credit threshold for Greek debt used as collateral for ECB loans, and his opinions on the potential for debt crisis spillover considering the recent downgrades to Portugal and Spain. So far, the ECB have carefully toed the official line that a break-up of the Eurozone or the possibility of a member state leaving the Euro group would be absurd; but given the continuing deterioration and uncertainty with every passing day, it's a scenario that may not be looking so outlandish after all.
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