Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
Stock Market Bubble 2025 - 11th Feb 25
Fed Interest Rate Cut Probability - 11th Feb 25
Global Liquidity Prepares to Fire Bull Market Booster Rockets - 11th Feb 25
Stock Market Sentiment Speaks: A Long-Term Bear Market Is Simply Impossible Today - 11th Feb 25
A Stock Market Chart That’s Out of This World - 11th Feb 25
These Are The Banks The Fed Believes Will Fail - 11th Feb 25
S&P 500: Dangerous Fragility Near Record High - 11th Feb 25
Stocks, Bitcoin and Crypto Markets Get High on Donald Trump Pump - 10th Feb 25
Bitcoin Break Out, MSTR Rocket to the Moon! AI Tech Stocks Earnings Season - 10th Feb 25
Liquidity and Inflation - 10th Feb 25
Gold Stocks Valuation Anomaly - 10th Feb 25
Stocks, Bitcoin and Crypto's Under President Donald Pump - 8th Feb 25
Transition to a New Global Monetary System - 8th Feb 25
Betting On Outliers: Yuri Milner and the Art of the Power Law - 8th Feb 25
President Black Swan Slithers into the Year of the Snake, Chaos Rules! - 2nd Feb 25
Trump's Squid Game America, a Year of Black Swans and Bull Market Pumps - 24th Jan 25
Japan Interest Rate Hike - Black Swan Panic Event Incoming? - 23rd Jan 25
It's Five Nights at Freddy's Again! - 12th Jan 25
Squid Game Stock Market 2025 - 5th Jan 25

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

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


© 2005-2022 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