Greek deal sets up ‘risk on' if the bulls have it in them

Quick Recap

An agreement has been made for the extension of the greek bailout for another 4 months. All that needs to happen now is for the Greek’s to present their ‘reform list’ to the Eurogroup tonight. Eurozone finance ministers will then approve the deal hopefully.

It’s worth reiterating what I wrote this morning at Business Insider:

This whole Greek mess shouldn’t really matter given China grows another Greek economy every month. But the reality is that in Greece, the seeds of the demise of the whole Euro project were sown if this deal was not reached. Of course, we get to do it all again in four months but hopefully in the intervening period the parties – Varoufakis, Schaeuble and Dijsselbloem in particular – can sort out a deal in private.

The question now is whether the bulls have enough impetus after this period of very quiet trading to drive the Euro higher. Having approached the bottom of the range on Friday night with a fall to 1.1265ish Euro ripped higher to close at 1.1400ish. That’s approximately where it sits this morning. 1.1450/60 is the top of the recent range and the fist sign that Euro is breaking higher. If it does or can that is.

Elsewhere with stocks in the US at new all time highs there is going to be some pend up demand when Shanghai returns from its holidays later this week and no doubt Tokyo traders will be buying with gusto today. It should filter into the Australian market and then certainly Europe tonight is likely to open stronger.

It’s a great set-up for a solid risk on start for the week and a great set-up for a rally in the Aussie dollar it seems as well.

On the day

On the data front, there is nothing to be released here at home although Tony Abbott is scheduled to delivery a national security statement to Parliament. It’s a holiday in China again and in Japan we get the release of the BoJ minutes to the recent board meeting. Tonight we’ll be watching the Eurogroup again and the IFO institute will release data for Germany. Home sales are the highlight in the US.

And here’s the overnight Scoreboard (9.30 am AEDT):

• Dow Jones: up 0.86%, 155 points to 18,140
• Nasdaq:up 0.63%, 31 points to 4,956
• S&P: up 0.61%, 13 points to 2,110
• ASX SPI 200 Futures: rose 14 points to 5,862
• FTSE:  up 0.38%, 26 points to 6,915
• AUDUSD: 0.7842
• EURUSD: 1.1398
• Crude: $50.75
• Gold: $1,203

CHART OF THE DAY:

AUDUSD – is this the start of something big?: The Aussie is approaching the top of the recent range at 0.7880/90. That’s solid for now but if it can break this level a run to 80 cents is on the cards.

A retest of the down trendline in the 79/80/80/20 region is on the cards.