Holiday Markets and Greece's ‘Monetary Asphyxiation

Morning View:
Good Morning Traders.

I hope you enjoyed your Bank Holiday Monday. Whether you actually observed it or not, the markets definitely did, putting in a lackluster day of sideways trading in a tight range. Holiday trading is a bit of a coin flip in terms of whether you get what happened yesterday where price doesn’t really move, or you can get crazy whipsawing price action if something spooks the already thin market.

As always though, Greece is never far from the news, and Finance Minister Varoufakis gave us this article which for me adds a bit of a human element to the austerity issue.

“The problem is simple: Greece’s creditors insist on even greater austerity for this year and beyond – an approach that would impede recovery, obstruct growth, worsen the debt-deflationary cycle, and, in the end, erode Greeks’ willingness and ability to see through the reform agenda that the country so desperately needs. Our government cannot – and will not – accept a cure that has proven itself over five long years to be worse than the disease.”

As a trader, it is easy to detach yourself from what the word ‘austerity’ actually means for the people of Greece. The question of how can Greece expect the ever get out of this mess if it is never allowed to spur economic growth has always been for me why they will be forced to leave the Eurozone. ‘Monetary asphyxiation’ as Varoufakis so vividly describes policy being forced upon his government is not and never will be the answer.

On the Calendar Today:
Already got a trade balance beat out of New Zealand early in Asia which saw the Kiwi spike up but has given almost all of it’s gains back as I sit down to my desk now. The market is primarily USD driven at the moment and USD is king.

No market moving tier 1 data until we hit the US session tonight with Durable Goods and Consumer Confidence.

Tuesday:
NZD Trade Balance (123M v expected 105M)

USD Core Durable Goods Orders
USD CB Consumer Confidence

Chart of the Day:
NZD/USD Daily:

With further RBNZ rate cuts on the cards, as the Fed driven USD theme kicks back in, the Kiwi could be one of the pairs that has the most to lose. The pair gave back almost all it’s 600 pip fall after the RBNZ successfully gave it a good jawboning. The fact that it was back above those levels before this USD driven fall tells me that if/when the RBNZ make their move, then the pair will look for new lows.

I am happy selling any sort of rally and possibly looking to get in early and playing for a break of the marked support level. Take a look at the Weekly chart and you can see that there’s not much left in terms of support below that level and things could possibly get ugly quite quickly.

NZD/USD Weekly: