Best of the Week
Most Popular
1. 2019 From A Fourth Turning Perspective - James_Quinn
2.Beware the Young Stocks Bear Market! - Zeal_LLC
3.Safe Havens are Surging. What this Means for Stocks 2019 - Troy_Bombardia
4.Most Popular Financial Markets Analysis of 2018 - Trump and BrExit Chaos Dominate - Nadeem_Walayat
5.January 2019 Financial Markets Analysis and Forecasts - Nadeem_Walayat
6.Silver Price Trend Analysis 2019 - Nadeem_Walayat
7.Why 90% of Traders Lose - Nadeem_Walayat
8.What to do With Your Money in a Stocks Bear Market - Stephen_McBride
9.Stock Market What to Expect in the First 3~5 Months of 2019 - Chris_Vermeulen
10.China, Global Economy has Tipped over: The Surging Dollar and the Rallying Yen - FXCOT
Last 7 days
Iran's Death Spiral -- 40 Years And Counting - 17 Feb 19
Venezuela's Opposition Is Playing With Fire - 17 Feb 19
Fed Chairman Deceives; Precious Metals Mine Supply Threatened - 17 Feb 19
After 8 Terrific Weeks for Stocks, What’s Next? - 16th Feb 19
My Favorite Real Estate Strategies: Rent to Live, Buy to Rent - 16th Feb 19
Schumer & Sanders Want One Thing: Your Money - 16th Feb 19
What Could Happen When the Stock Markets Correct Next - 16th Feb 19
Bitcoin Your Best Opportunity Outside of Stocks - 16th Feb 19
Olympus TG-5 Tough Camera Under SEA Water Test - 16th Feb 19
"Mi Amigo" Sheffield Bomber Crash Memorial Site Fly-past on 22nd February 2019 VR360 - 16th Feb 19
Plunging Inventories have Zinc Bulls Ready to Run - 15th Feb 19
Gold Stocks Mega Mergers Are Bad for Shareholders - 15th Feb 19
Retail Sales Crash! It’s 2008 All Over Again for Stock Market and Economy! - 15th Feb 19
Is Gold Market 2019 Like 2016? - 15th Feb 19
Virgin Media's Increasingly Unreliable Broadband Service - 15th Feb 19
2019 Starting to Shine But is it a Long Con for Stock Investors? - 15th Feb 19
Gold is on the Verge of a Bull-run and Here's Why - 15th Feb 19
Will Stock Market 2019 be like 1999? - 14th Feb 19
3 Charts That Scream “Don’t Buy Stocks” - 14th Feb 19
Capitalism Isn’t Bad, It’s Just Broken - 14th Feb 19
How To Find High-Yield Dividend Stocks That Are Safe - 14th Feb 19
Strategy Session - How This Stocks Bear Market Fits in With Markets of the Past - 14th Feb 19
Marijuana Stocks Ready for Another Massive Rally? - 14th Feb 19
Wage Day Advance And Why There is No Shame About It - 14th Feb 19
Will 2019 be the Year of the Big Breakout for Gold? - 13th Feb 19
Earth Overshoot Day Illustrates We are the Lemmings - 13th Feb 19
A Stock Market Rally With No Pullbacks. What’s Next for Stocks - 13th Feb 19
Where Is Gold’s Rally in Response to USD Weakness? - 13th Feb 19
US Tech Stock Sector Setting Up for A Momentum Breakout Move - 12th Feb 19
Key Support Levels for Gold Miners & Gold Juniors - 12th Feb 19
Socialist “Green New Deal” Points the Way to Hyperinflation - 12th Feb 19
Trump’s Quest to Undermine Multilateral Development Banks - 12th Feb 19
Sheffield B17 US Bomber Crash 75th Anniversary Fly-past on 22nd February 2019 Full Details - 12th Feb 19
The 2 Rules For Successful Trading - 12th Feb 19 -
Financial Sector Calls Gold ‘Shiny Poo.’ Are They Worried? - 11th Feb 19
Stocks Bouncing, but Will They Resume the Uptrend? - 11th Feb 19

Market Oracle FREE Newsletter

The Real Secret for Successful Trading

Now that Greece is Guaranteed in the Euro, the Euro is Down

Currencies / Euro Jul 21, 2015 - 05:31 AM GMT

By: Atlantic_Perspective

Currencies

One of the mantras repeated to exhaustion over the last few months was “if Greece leaves the Euro, the Euro is over”. Is it? The charts say the opposite. When the prospect of Grexit reached its peak, the Euro didn´t crash. Quite the opposite, it got stronger. Now that Greece seems “secure” in the Euro, the Euro is down. Could the Grexit mantra be wrong?


Mantras are designed to reinforce ideas, not to make people think about them. If an idea is repeated “ad nauseum”, most people end up accepting that idea without actually knowing why. They just do.

Most people and analysts will swear that Grexit will destroy the Euro. But not many give rational explanations as to why. The Atlantic Perspective explained in detail, about two weeks ago, why Grexit would actually be good for the Euro. You can read that article here: http://www.atlanticperspective.com/top-stories/july-12th-2015

Since Grexit was avoided, the Euro hasn´t done anything but fall. Based on actual market behaviour and not on speculation, we can narrow Grexit´s impact on the Euro to two outcomes:

1. Grexit is good for the Euro.
2. Grexit is irrelevant for the Euro.

Charts don´t lie:

The Euro´s response during and after the Greek negotiations, excludes the option of Grexit being bad for the Euro. The Atlantic Perspective maintains that Grexit would be good for the Euro for the following reasons:
1. Economically speaking, Greece counts very little in the Eurozone. The direct economic impact of Greece leaving the Euro or even the EU is absolutely marginal.

2. Private investors and world institutions know for a long time that Greece is broke. The possibility of Grexit has therefore been anticipated and doesn´t come as a shock to anyone. The Euro has priced in this possibility, a long time ago.

3. The stock market is forward looking. The Greek ordeal is yesterday´s news to investors. Big money is more concerned with the next big tech leap or the possibility of a financial crash in China. Greece is just a distraction.

4. The billions given to Greece to avoid Grexit, would get a much better return if used within the lending nations. The markets would prefer that the bailout money would instead be used to help revive the European economy. This would be much more productive. This aspect is never mentioned and penalizes the Euro.

Euro/Dollar forecast:
Now that it seems clear that Greece will stay in the Euro (at least for the next few months) while the bailout program is implemented, we expect the Euro to trend down and test the lows established a few months ago. If new lows are established, then there is a real possibility of the US Dollar reaching parity with the Euro before the end of the year. That´s the Atlantic Perspective

Copyright © 2015 by The Atlantic Perspective.

The Atlantic Perspective is an opinion blog, aimed at explaining and providing solutions to some of the world´s most relevant issues.

www.atlanticperspective.com


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules