25 May 2015
Yen to benefit on Grexit uncertainty - FXStreet
FXStreet (Guatemala) - Omkar Godbole, analyst and editor at FXStreet explained that the Yen may find support from Greek uncertainty.
Key Quotes:
"The Japanese Yen or for that matter most of the safe haven assets, including Gold have repeatedly failed to strengthen significantly amid the Greek uncertainty since last couple of months. Moreover, each time markets were convinced about a last minute “kicking the can down the road” deal."
"However, Greece once again faces the real risk of default if the deal is not reached before its payments to IMF become due in early June. Greece is scheduled to repay EUR 1.6 billion (USD 1.76 billion) to the IMF between June 5-19, but the payments may not be met as the country runs out of cash."
"Markets may remain calm on hopes of last minute deal once again, however, there is plenty of scope for safe haven bond yields to drop. German 10-year bond yield trades between 0.5% to 0.6%, compared to its record low of 0.049%. Meanwhile, US 10-year yield trades at 2.21%. "
"Consequently, Greece issue could see markets once again have a go at safe haven trade – buy German bonds, Sell periphery Eurozone bonds. A drop in the German yields would also pull the Treasury yields lower, thereby strengthening the Japanese Yen."
Key Quotes:
"The Japanese Yen or for that matter most of the safe haven assets, including Gold have repeatedly failed to strengthen significantly amid the Greek uncertainty since last couple of months. Moreover, each time markets were convinced about a last minute “kicking the can down the road” deal."
"However, Greece once again faces the real risk of default if the deal is not reached before its payments to IMF become due in early June. Greece is scheduled to repay EUR 1.6 billion (USD 1.76 billion) to the IMF between June 5-19, but the payments may not be met as the country runs out of cash."
"Markets may remain calm on hopes of last minute deal once again, however, there is plenty of scope for safe haven bond yields to drop. German 10-year bond yield trades between 0.5% to 0.6%, compared to its record low of 0.049%. Meanwhile, US 10-year yield trades at 2.21%. "
"Consequently, Greece issue could see markets once again have a go at safe haven trade – buy German bonds, Sell periphery Eurozone bonds. A drop in the German yields would also pull the Treasury yields lower, thereby strengthening the Japanese Yen."