EUR/USD, GBP/USD Commentary March 6, 2012

EUR/USD, GBP/USD Commentary March 6, 2012

Posted on March 6, 2012 by Chad

Time is ticking away for the festering pimple on the forehead of the world known as Greece. Dont get me wrong I have nothing against Greece but what I am sure of is most every sane person would agree that if we could have just went through the pain and popped it instead of let it fester the healing would have begun long ago and the pain would be diminishing by now. However it would seem the the crony banksters that run things cant understand this analogy and would rather just continually put a band-aid on said pimple and let it fester until its so infected that when it does finally pop it has potential to create a huge scar on the face of the world. Most likely because they are shielding their wealth from the infection before the eruption happens. Go figure.

Now we are getting reports that the IIF and its members have all but 1 agreed to take the hit and agree to the PSI deal offered. As usual we have conflicting reports on just how big of a chunk of the Greek bonds they collectively hold. This is from the FT.

  ”A large grouping of private creditors agreed on Monday to take part in the multibillion-euro Greek debt swap in a significant step forward for Athens as the country struggles to avert a sovereign default. Twelve banks, insurers, asset managers and hedge funds in the steering committee of bank lobby group the Institute of International Finance said in a statement that they would take part in the bond exchange. Members of the IIF steering committee include BNP Paribas, Deutsche Bank, National Bank of Greece, Allianz and Greylock Capital Management. A spokesman for the IIF said this represented a “substantial” amount of the €206bn in Greek bonds held by the private sector that banks managing the swap are trying to involve. Analysts estimate that institutions represented by the IIF make up about 50 per cent of the private sector bonds.”

Now I dont know about you but when I hear the word analysists I get a little jittery thinking of just how these folks come up with their numbers and release this data without putting their name on the paper to take the fall when they are wrong. Of which quite often they are. It reminds me of the old “4 out of 5 dentists surveyed recommends Colgate”. Or was it Crest?

So all is well according to the FT. Well lets get on over to Bloomberg for some corroboration. This is what they had to say.

”Private Investors Holding About 20% of Greek Debt to Join Swap…The 12 members of the creditors’ steering committee that said today they would join in the exchange have debt with a face value of about 40b euros ($53b), compared with the 206b euros of Greek bonds in private hands, according to data compiled by Bloomberg from company reports.” 

And this is from Zero Hedge

As we said earlier today, everyone is now scrambling to get some color on how many funds are currently part of the Bingham group of ad hoc hold out creditors and how many bonds they represent. If the above is even remotely indicative of holding patterns 3 days ahead of the deadline, the PSI ain’t gonna happen.

For me being a Forex trader that only trades the manipulation of the markets. I am always skeptical of such releases of information. Since it is well known that the Smart Money will use these releases as a tool in their manipulation tactics. The last thing I want to do is follow the herd of sheeple. So lets look at the 2 releases a bit closer.

The FT said that the 12 banks and insurers hold about 50% of the outstanding Greek bonds. Ok that’s fine so if correct then they should hold roughly 100Bil Euros of the 206Bil outstanding right?

Then Bloomberg tells us that these 12 banks and insurers hold roughly 53Bil Euros of Greek debt at “face value”. What gets me thinking here is are we talking about current face value? Of which is roughly 50% or less than the full face value before the crisis. So here is my question. Which face value is Bloomberg going by? The implication is that they are using full face value since they are saying that it only represents 20% of outstanding bonds. However if they are using current face value of the bonds at 50% or less and then in reality the FT was correct and they represent 50% of the outstanding bonds of which is 103Bil Euros of the 206Bil. Seems strange to me at this point. I wonder if Michael Bloomberg has a Euro long position hes trying to add to. Two more days and we will have the answer.

Looking at the 1hr chart of the EUR/USD we have had 2 levels of drop and expect a third today considering the SM 3 level trend. I will be looking for the trap move when the Smart Money is trapping long positions and look for the short just as I was yesterday. My short went 38 pips my direction before hitting me at break even. 

The GBP/USD 1 hour chart chart shows we have only reached level 1 of the SM trend and should have 2 more to go. It is possible that is has moved off to level 2 already considering the 3 level intraday push starting from the end of the day Friday thru Monday but with the nice pullback during the London session yesterday I feel this is the higher probability trade. This is the pair I will be looking to trade today since it should have a longer run to level 3.