Greek Elections

Trading Discussion Currencies
1

Hello everyone,

I just received an email from my broker, Oanda, that they will be halting all trading on Sunday, June 17th. I called a customer service rep and was informed this is due to the Greek and Egyptian elections taking place that day. I am wondering what you guys think about this? Should I short Euros in the anticipation that Greece will remove itself from the Eurozone? I am newer at forex trading, and was looking for some insight. My own “common sense” would tell me that it’s likely for the Greek citizens toleavings leader that would result in them leaving the euro. But would this be a good thing for the euro? That such a volatile country is not weighting them down anymore, or would traders take this as a bad thing and sell the euro in droves?

2

My advice is to not have any open positions going into the weekend.

Btw, greek betting companies have much lower odds on the euro friendly party winning than the odds of Syriza winning. So I at least would be careful shorting the euro… or going long for that matter before this weekend.

3

That would be a gamble. If you do, take a small position and be prepared to lose it. I’m going to trade the open, it should be a crazy time.

4

Well, Idk if I’m supposed to share broker messages or not, but I got this one from my broker (FXCM) and have posted it on a few other threads, but thought it would be very relevant to this particular one. I found it EXTREMELY informative, I hope you do too.

Here it is:

CAUTION: Uncertain Landscape ahead due to Greek Elections Warrants Reduced Leverage

Greece is headed back to the polls this weekend following the inconclusive results of the May 6 parliamentary elections. Unlike the first elections, the June 17 elections have significant consequences tied to it that will likely result in exceptional market volatility. With the significant event risk expected to occur during hours FXCM’s trading platform is offline (17:00 EDT / 21:00 GMT on Friday to 17:00 EDT / 21:00 GMT on Sunday), Sunday’s open poses the threat of not only a significant gap, but spreads wider than usual as well. Accordingly, we believe that this is not the trading landscape to speculate, and we suggest reducing position sizes given the significant amount of uncertainty forthcoming.

To help traders make the best informed decision headed into the weekend’s critical event, please find below a concise summary of the likely outcomes of the Greek parliamentary elections, and for those interested, a fact sheet on each of the main parties competing in the Greek elections.

THE TAKEAWAY: June 17 Greek Parliamentary Elections > Outcome Could Determine Greece’s Fate in Euro-zone

There are two main parties vying for control of Greece’s government this weekend, the pro-bailout New Democracy party and the anti-bailout Syriza party. In a sense, and especially given the rhetoric deployed by non-Greek European leaders, these elections will determine the fate of Greece’s inclusion in the Euro-zone. It boils down to this: a vote for New Democracy is considered pro-Euro; and a vote for Syriza is considered anti-Euro.

We believe there are four likely outcomes to these elections, with the highest probability of a Euro-negative outcome this weekend. They are:

• SCENARIO #1: New Democracy wins elections and has parliamentary majority (> 151 votes) – EUR BULLISH – 10%
• SCENARIO #2: New Democracy wins elections but does not have majority – EUR BEARISH (least bearish outcome) – 45%
• SCENARIO #3: Syriza wins elections but does not have majority – EUR BEARISH (increasingly bearish outcome) – 40%
• SCENARIO #4: Syriza wins elections and has parliamentary majority – EUR BEARISH (most bearish outcome) – 5%

In light of these expected outcomes, we find it most likely that the elections will not yield the most bullish outcome (scenario #1), but instead, falling somewhere between the least bearish and moderately bearish outcomes (scenario #2, #3). We have derived these probabilities from recent poll figures as well as commentaries from citizens and reporters in Greece.

Recent Poll Numbers
• Public Issue, one of the leading opinion companies in Greece, carried out a phone opinion survey from May 25-30 across a general population sample of 1210 adults from across Greece. The results estimated 31.5% support for Syriza, 25.5% for New Democracy, 13.5% for Pasok, 7.5% for Dimar. Compared to poll results from the week prior, support for Syriza had risen 1.5% (from 30%), fallen 0.5% (from 26%) for ND and fallen 2% (from 15.5%) for Pasok. The margin of error was +/-2.8 percentage points.
• Kapa Research SA surveyed 1012 people for the Athens-based Ta Nea newpaper, in a poll conducted from May 29 to 31. The results estimated 26.1% support for New Democracy, 23.6% for Syriza and 9.9% for Pasok. Compared the last poll held on May 23-24, support for ND rose 0.3% (from 25.8%), rose 3.5% (from 20.1%) for Syriza, and fell 3.1% for Pasok (from 13%). The overall margin of error is +/-3.1 percentage points.
• A Rass poll conducted for Eleftheros Typos showed 26.5% support for New Democracy, 24.2% for Syriza and 9.9% for Pasok.

For those interested in learning more about each of the main parties competing in the Greek elections on June 17, please find below a summary of New Democracy’s then Syriza’s platforms.

New Democracy – Platform Points

  • Scale back taxes and boost jobs as part of an overall renegotiation of the country’s debt deal with its international creditors

  • Replace some taxes, such as a property tax introduced last fall, with “fairer” levies

  • Revoke cuts to lowlevel pensions and to the salaries of police and air force employees, as well as boost the job market

  • Support low income households and small businesses that have been hit hardest by the debt crisis

  • Help indebted households to repay their dues to banks

  • Accelerate structural reforms and the privatization program, with the “rebirth” of the public sector with no mass layoffs of civil servants

  • In regards to the €11.7 billion in public spending cuts that Greece’s creditors have demanded by the end of 2013, ND (Samaras) said these should be made gradually over the next four years

  • Declaration of exclusive economic zones in the sea to exploit natural resources.

  • Enforce a harsh line against illegal immigration

Syriza – Platform Points

  • Creation of a shield to protect society against the crisis

  • Unconditional guaranteed minimum income or unemployment benefit, medical care, social protection, housing and access to all services of public utilities for all citizens

  • Protection of and relief measures for indebted households

  • Price controls and price reductions, VAT reduction, and abolition of VAT on basicneed goods

  • Disposal of the debt burden, specifically through:

  • Moratorium on debt servicing

  • Negotiations for debt cancellation

  • Regulation of remaining debt to include provisions for economic development and employment

  • European regulations on the debt of European states

  • Radical changes to the European Central Bank’s role

  • Prohibition of speculative banking products

  • A pan-European tax on wealth, financial transactions and profits

  • Income redistribution, taxation on wealth and elimination of unnecessary expenses

  • Productive social and environmental reconstruction

  • Nationalization/socialization of banks

  • Stable employment with decent wages and social insurance

  • Deepening Democracy: democratic political and social rights for all

  • Restoration of a strong welfare state

  • Immediate rescue of the pension system

  • A rise in unemployment benefits

  • The introduction of a guaranteed minimum income. “Diverse fragmentary reforms and policies must be united in a national system of guaranteed funds from the national budget. An unconditional basic income, accomodation with heating, electricity and telecommunications, food and clothing, transport, help at home, legal coverage and representation can thus become rights of all citizens.”

  • Free health care, which will be financed through a Public Health System

  • Protection of public education, research, cultures, and sports from the Memorandum’s policies

  • An independent foreign policy committed to the promotion of peace

  • Peace-seeking foreign policy

  • Disengagement from NATO and closure of foreign military bases on Greek soil

  • Aiding the Cypriot people in the reunification of the island

— Written by Christopher Vecchio, Currency Analyst

Read more: 301 Moved Permanently

5

im not sure how much of a big risk to trade would be…

My thinking is that there are two scenario’s, either will result in a massive market reaction:

  1. Greece elects a pro austerity govermment in which case the Euro jumps

  2. Greece elects an anti austerity goverment in which case one of two things may happen:

    Scenario one: The worlds central banks respond immediately - ie on Sunday prior to markets reopening - by flooding the market with liquidity inc QE3 by the Fed (note The UK central bank has already indicated it is ready to flood the market with paper) - which may result in either the euro jumping or falling (falling if the market doesnt believe it is sufficient to protect banks from Greece not playing ball)
    Scenario two: The central banks do nothing and the euro falls, along with the AUD (unlikely in my opinion)

Given these two scenario’s, my thinking was to enter into fully hedged trades in the last minutes of trade with approx 25 pip Stop losses and take profit of 100 pips… Pairs I wanted to target are EUR/USD; EUR:AUD and AUD/USD (the last being an indicator of global appetite for risk - if things turn bad the Aussie will drop)…

Only one problem, I got distracted and did not enter the trade… time will tell if I have missed a golden opportunity…

6

I think its all over for Greece, they are out of the EURO, we will likely see a fall in the EURO followed by a rally as they would have gotten rid of the bad egg.

Personally i think central bank intervention is fully tapped, its all or nothing now.

7

They may likely be, but right now it’s not that black and white. Even if SYRIZA wins, and denies the bail out austerity terms, then Europe may still work with them to negotiate different terms. It’s not like they actually want to see them leave. That would make the rest of them look bad, and why would they want that?

8

None of us know whats going to happen however i was in Cyprus 2 weeks ago and the general consensus is that the people want to get out of the EU. Cyprus itself is obviously not Greece but its close. There is very much a feeling of negativity towards the EU.

9

Okay, this isn’t exactly on topic, but I think it’s relevant. If Greece does leave the Euro… Is there any possible way for me to take a short position on the Drachma?! :stuck_out_tongue:

10

megapronk,
I don’t think so… Drachma will probably thrown to crap the second it is issued. Additionally, I don’t think brokers will have it available for trade.
On topic, I don’t think it really matters in the long run who wins the elections. Greece, despite all their crap, knows that if they leave the euro to fend for themselves, they’ll be pretty much screwed. Additionally, none of the central banks or big wigs want greece to leave the euro since it would cost way too much. Merkel is taking a hard stance, but she’s probably doing so because of two things:

  1. have to be stalwart and demanding in order to exact change in the delinquent economies of europe. This basically speaks to the whole “moral hazard” term made so popular during and after 2008’s credit crisis. Only difference is that we’re talking countries, not just institutions.
  2. Perhaps, even if it does look like Greece is about to ditch the euro, Germany probably believes (perhaps rightly so) that they can pull an emergency rescue plan.

Honestly I think there has to be something done about moral hazard, yet you can’t be so absolutist… delicate balancing act.

11

I disagree with your sentiment on “Greece elections don’t matter in the long run” so I’ve found a video that shows not only how bad the Euro is doing, but also where it is likely to go. Some of you may know this man, Nigel Farage, and I think he’s one of the only few European leaders that’s willing to actually tell it like it is.

Here’s the video:

12

i said the elections probably dont matter in the long run because regardless of who is elected, the ECB AND the new greek gov’t will try to keep greece in the euro. All I’m saying is that no matter who is elected, it is pretty much understood that greece won’t just up and ditch the euro.
However, that’s not to say that greece WILL stay in the euro. If conditions worsen/don’t improve quickly enough, regardless of which party is controlling greece, you can expect the same outcome.
I read this in a book before, I don’t remember which but it went something along the lines of
[I]If you throw a stone in the river, it doesn’t change the water’s flow. It’ll create a ripple, maybe even a splash, but the river flows onward.[/I]

13

That’s very true. However, if you continue throwing stones (as the economy has been at Greece and the rest of Europe) Then eventually they will create a dam.

14

Thank you for providing that video. I had pretty much given up all hope of ever coming across a decent politician again, especially in the European Parliament, which at least in Sweden is considered pointless and just an ATM for retiring politicians.
Nigel gives me some hope, although he’s sadly outnumbered by morons.

15

He really is. I think he’s a political genius. You should search his name on YouTube, there’s so many more videos from him pretty much just yelling at the EU. :stuck_out_tongue: He’s a great public speaker too.