A Greek tragedy

Having pegged the euro as a sell last month I’m feeling all Nostrodamusey (that one caused spell check a bit of an issue!)  OK, so I was a little more short term than 500 years but as options traders will tell you, time is money. Given enough time, anything can happen so their volatility and pricing goes up.  The chances euro can trade back above 1.5000 to the dollar are there; chance it will happen tomorrow, ermm, nil, within the next 500 years, easy. Yes. 
 
So you could say FX traders are smarter than a 500 year old French seer, not that you would get too many agreeing with you!
 
At the time of writing the Greek tragedy is still playing out, Euripides being the last of the three tragedians of classical Athens (Wiki). I am by no means learned in the Greeks but thought the name of this guy more prophetic than Nostro was.  Euripides was knocking around 450 BC. Take his name, a little poetic licence and you get a Greek tragedy written by EUR RIP edes, – if only he could have spelt his name with two rs this would have worked so much better, remind me to have a word.
 
Those interested in the euro will have read all about Greece’s deficits, not able to create more income, reliant largely on tourism, overspending by a previous government, creative accounting on the extent of the debt, a unionised militant workforce, I could go on but those that haven’t joined the local dots probably should not be reading this column.  We don’t live in a vacuum, the issues aren’t new; how they are dealt with is crucial.
 
Ireland is not much better off than Greece but they have taken a sabre to public spending and have been largely rewarded by the global economic community. However, there’s always a however, if Government isn’t employing them, then they, government, end up paying them for doing nothing for a while through unemployment benefits.  Just shuffling accounting entries? I’m no accountant but if I were spending money I would want some output for expenditure. 
 
I will touch (briefly) on another of last months suggestions, that of trading GBP range – buy below 1.60 and sell over 1.70.  Not a spectacular success.  Selling at 1.70 is now perhaps a bit optimistic, and if you still want to buy at 1.60, email me.  I should have considered GBPEUR in the whole context, euro was a deffo sell, with that the GBP ranges would perhaps be a buy at 1.55 and a sell at 1.65.
 
Enough of the past, more on the future.  A couple of definitives.  Euro will see 1.50 again, sometime, GBP will be above 1.70, obviously the question is time, when?  Without a shift in dynamics we are going to see 1.30 and 1.50, respectively. A long time before then.

Disclaimer: The views expressed are the opinions of the writer and whilst believed reliable may differ from the views of Butterfield Bank (Cayman) Limited.  The Bank accepts no liability for errors or actions taken on the basis of this information

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Money Markets by Butterfield Bank’s Phil Turnbull

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