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26 Jan 2015
Larger than expected Syriza victory leaves euro vulnerable in short-term – BTMU
FXStreet (Barcelona) - Derek Halpenny, European Head of GMR at Bank of Tokyo-Mitsubishi UFJ, views that the larger than expected victory of Syriza in the Greek elections leaves euro vulnerable to further selling in the short-term.
Key Quotes
“The EUR/USD rate hit an new intra-day low in this move, of 1.1098 earlier today, in response to the election victory of Syriza in Greece yesterday – an 11-year low. The euro has rebounded notably since recording that low however and this reflects the strong market expectations of a Syriza victory and also some relief that Syriza has fallen short of winning an outright majority in parliament.”
“Syriza came up just short of gaining a majority winning 149 seats in the 300-seat parliament. That seat count was derived from a vote share of 36.4%, larger than what recent opinion polls were showing.”
“The larger than expected victory certainly leaves the euro vulnerable for further selling over the short-term.”
“In his acceptance speech last night, Alexis Tsipras spoke strongly of an end to austerity and the humiliation for Greece but added that there “will neither be a catastrophic clash nor will continued kowtowing be accepted”. He added that he was fully aware that the Greek people hadn’t “given us carte blanche but a mandate for national revival”.”
“As we stated [..] we see a period of prolonged negotiations with Syriza getting some of what it is calling for. We also do not expect existential risks to return fuelled by concerns of a departure of Greece from the euro-zone. However, there are certainly increased risks and an error in the negotiating stage could mean this becomes a bigger negative for the market going forward.”
“For now though, with the euro already down 14 big figures since mid-December, we do not see this fuelling notable further euro selling at this stage.”
Key Quotes
“The EUR/USD rate hit an new intra-day low in this move, of 1.1098 earlier today, in response to the election victory of Syriza in Greece yesterday – an 11-year low. The euro has rebounded notably since recording that low however and this reflects the strong market expectations of a Syriza victory and also some relief that Syriza has fallen short of winning an outright majority in parliament.”
“Syriza came up just short of gaining a majority winning 149 seats in the 300-seat parliament. That seat count was derived from a vote share of 36.4%, larger than what recent opinion polls were showing.”
“The larger than expected victory certainly leaves the euro vulnerable for further selling over the short-term.”
“In his acceptance speech last night, Alexis Tsipras spoke strongly of an end to austerity and the humiliation for Greece but added that there “will neither be a catastrophic clash nor will continued kowtowing be accepted”. He added that he was fully aware that the Greek people hadn’t “given us carte blanche but a mandate for national revival”.”
“As we stated [..] we see a period of prolonged negotiations with Syriza getting some of what it is calling for. We also do not expect existential risks to return fuelled by concerns of a departure of Greece from the euro-zone. However, there are certainly increased risks and an error in the negotiating stage could mean this becomes a bigger negative for the market going forward.”
“For now though, with the euro already down 14 big figures since mid-December, we do not see this fuelling notable further euro selling at this stage.”