Short EUR/JPY (16 May) on Italian Political news
Position stopped out on within 24 hours
Real-Time AmpGFX – Sold EUR/JPY to add to short (Wed 5/16/2018 7:30 AM MT)
Sold half unit EUR/JPY at 129.71 to add to short
Comment
I have decided to add to the short position. On reading the news, the latest position is that the government wants to adopt fiscal policies that seem incompatible with its commitment to the Euro.
10-year bund yields are down 4.5bp, Italian yields are up 11.5bp, Greek yields are up 24bp, Spain is up 2.5bp.
I think the risk is significant that we see a bout of Euro driven risk aversion that caps US yields for now, throws into doubt an end of ECB QE, and potential further spread widening for Italian debt.
Positions
Long half unit AUD/NZD at 1.0680; s/l 1.0843
Short one unit EUR/JPY at 129.71; s/l 130.73
Real-Time AmpGFX – Sold EUR/JPY (Wed 5/16/2018 6:58 AM)
Sold half unit EUR/JPY at 129.71
Comment
The leaked Huff Post Article on Italian coalition talks between M5S and Lega suggest the government might call for radical changes including debt forgiveness.
While later reports deny they will consider pursuing exiting the EUR, Facebook posts from Lega talk about returning to pre-Maastricht standing. This suggests they want to break fiscal responsibility rules and seek debt forgiveness.
This will never fly, and was a red line in past dealings with Greece. But it threatens to throw the Eurozone into another crisis.
A lot to unfold from here, but we have decided to try a EUR/JPY short as we assess developments more closely. Already Euro periphery spreads have blown out more significantly than they have for some time.
Positions
Long half unit AUD/NZD at 1.0680; s/l 1.0843
Short half unit EUR/JPY at 129.71; s/l 130.73