Downgraded Once More… |
Even more problems for Greece – just couple of days after rumors of that country leaving the Euro began to circulate, one of the major rating agencies decided to downgrade Greek sovereign debt. Again. Just in March Standard & Poor’s lowered the rating to a “speculative” (junk) level and now assigned a “highly speculative” (super junk?) rating. This move came European politicians publicly commented that the current bailout might not be enough and additional funds will be needed.
As always, the Greek finance ministry said the latest downgrade – especially so soon after the previous one – was “not justified”. Possibly, but according to the S&P, increasing the amount of the bailout package and extending maturities on the debt, amounts to a “selective default”. The agency claim that sooner of later private creditors will be forced to make similar accommodations, including lowered interest rates. That part of restructuring is believed to inflict massive losses on those who currently hold Greek debt. We shall see if other agencies follow suit and then move on to punish other of the PIIGS countries, too.
The Euro slumped again – not as bad as last week, but moved lower nonetheless. However, my interest in the common currency was focused on the first few hours after the open, when I expected a short term reversal, or a bullish bounce, using the EUR-CAD pair. The premise was relatively simple, buy a bullish reversal pattern on the hourly chart. Trading was very soft right after the open, but few hours later the price made a new low for the move and formed a hammer, which was a buy signal. I settled for a 60 pips gain, although another 20 or so were possible. An O.K. start of the week.
Mike K.
About the author: Mike Kulej
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