Now, finally, a new rescue package for Greece was approved. It amounts to EUR 130bn; reduced interest rates on the debt; a PSI agreement involving CAC’s (keep an eye on the interest-rate reaction in the other PIIGS countries), and a debt reduction by 53.5%, etc. On the whole a fairly positive agreement with the purpose of reducing the debt to 120.50% in 2020.
We expect that the rescue package will trigger a bit of positive sentiment (EURUSD has already increased by almost 0.5% after the news), but within a few days we expect, on the other hand, that the package may mark the beginning of a major correction for risky assets. We maintain our present recommendations this morning, but it may be worthwhile to keep an eye on any announcements over the day in case we assess that the time for selling risky assets has come. We see strong correction potential in EURJPY, EURUSD, EURSEK (USDSEK or JPYSEK), EURPLN (USDPLN) as well as NZDUSD and AUDUSD.
Today will not see any economic indicators of importance. Overnight, PMI manufacturing data will be published.
The most recent figure was below 50. In the wake of last weekend's reduction of the reserve requirements, it will be interesting to see whether there is any correlation between this reduction and the economic development. A figure below 50 will be bad news and cause currencies such as AUD, NZD, CAD and EM currencies to fall slightly.
EURUSD (NEUTRAL): From a purely technical point of view, a breach at 133.20 will signal that we may again see a level at about 135. We will take advantage of a movement up towards this level to recommend Sell, but we will have to wait and see whether we see such a high level or whether, already today, the market will turn around on a 'buy-the-rumour, sell-the-fact" movement. A level below 131.50 will trigger the turnaround.
EURJPY (NEUTRAL): As we stated yesterday, we are tempted to recommend sell. We have seen JPY being under massive pressure lately. Offhand, we do not see any structural shift in JPY indicating that JPY has initiated a general weakening trend (BUT we expect that this may happen at some time in 2012), and therefore the recent weakening against EUR seems to be a bit exaggerated. We expect to see a higher return on a sale of EURJPY than a sale of EURUSD We remain hesitant but consider the area at about 106 attractive for selling. Alternatively in the event of a breach of the uptrend at 102. Keep an eye on any news issues in this respect over the morning/afternoon.
EURSEK (BUY): It has been extremely difficult for the cross rate to gain momentum on the upside, and to a great extent, this can be attributed to the very biased development in the equity market. There is every indication that the equity market is in for a correction, but the timing is difficult. March may very well be a tough month for risky assets and hence SEK will weaken. Maybe we will already early next week see small indications of a slowdown.
EURNOK (NEUTRAL): The central bank governor will make a speech on the Norwegian economy this morning. There is a risk of a verbal intervention. The industrial sector has begun to 'whine' over the strong NOK.
Chart: EURUSD
Jyske Bank
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