Risk Assets Rejuvenated on Greek Polls

Risk Assets Rejuvenated on Greek Polls

By Tim Waterer (Senior Trader, CMC Markets)

The trading mood to start the week has been buoyed by news that Greece seems to be warming to the New Democracy party, with the reduced likelihood of an ugly Greece exit helping to lure some buyers back into stocks and higher-yielding currencies.

With the market feeling marginally better about Greece, the defensive flow of funds into the US Dollar has eased which has opened the door for the Euro to show some semblance of life again after last week’s steep descent.

The Australian Dollar has looked rejuvenated to start the week having jumped a cent higher on the better looking news from Greece. With the AUDUSD pushing past 0.9850, a move to 0.9920 is on the cards over the coming 24-48 hours if market optimism over Greece can continue to sap some of the defensive buying plays away from the US Dollar.

The brisk start to the week by stocks and higher yielding currencies could only have a short tenure though. There is no shortage of potential stumbling blocks for financial markets this week in the way of economic data releases around the globe, culminating with US Non-Farm Payrolls on Friday. A solid jobs number may shift focus off the Eurozone debacle however a weak result will just exacerbate global growth fears.

With a glimpse of optimism emerging from the Greek polls, the Materials and Energy sectors on the Australian market ‘made hay’ on the better news to kick-off the week. The political developments in Greece caused stoked commodity prices such as gold and oil, which translated into an outperformance by the ASX200 index compared to other Asian bourses on Monday

However with the myriad of data and events due for the rest of the week, traders will be adopting a proceed-with-caution approach, with recent evidence suggesting downside moves are likely to be more sizeable than any swings to the upside.

ENDS

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