Markets Upbeat After Greek Austerity Vote

Events from Greece are still dominating the airwaves and FX positioning. The latest headlines indicate that the vote in Athens on the €130 billion package has passed in a 199-74 count. The next step, before any Troika cash is released, is for the austerity plan to be accepted by the EU in a Euro-zone FinMin meeting in Brussels on Wednesday. In the last few days, Greece's ruling party officials made an impassionate plea to Greek parliament hoping to ensure that this austerity bill was accepted. The finance minister called into question the euro participation while PM Papademos stated 'The social costs that come with these measures are contained in comparison to the economic and social catastrophe that will follow if we don't adopt them.' The news that the agreement passed will lower the risk of a disorderly default but we suspect that Greece and Europe are far from being out of the redzone. But for today, risk firmed on the positive result. Asia's regional indices were higher which pushed USD lower. The Nikkei was up 0.58% and Hang Seng 0.50%, however, in late session trading Shanghais slipped marginally into the red. EURUSD was able to rally of Friday's lows at 1.3160 and rally to 1.3284. But the big story remains commodity and EM currencies which continue to make strong moves and has many understandably predicating a correction. First there is the overriding risk of executions which currently, the Greek administers have come up significantly lacking. In fact, in the last 18 months the original austerity promises have not been executed. And this lack of political will to implement cuts in a system where cronyism rules will probably send Greece back looking for EU handouts by year's end. This fear is also a concern in Brussels, as guarantees that the reforms will be implemented regardless who wins the next general elections must be provided. In addition there is only a very small opening for Greek policy makers to actually execute necessary measures needed to ensure cash is ready for the late march deadline. Greece must make its final debt swap offer to private-sector bondholders by this Friday and there is little evidence that an agreement has been reacted. Clearly there are plenty of downside risks in fiscal consolidation measures which have become glaringly obvious by watching the social unrest in Greece. However, the general calls for a risk pullback seem to be a reaction to the recent bullish run of risks correlated trades and natural inclination for mean reversion, than real fundamentals. With the Fed, BoE, ECB injecting massive liquidity into the system, the ECB LTRO decreasing the possibility of a tail like event and global growth stabilizing we suspect that buying risk continues to be the key trade.

00:00 USD Obama to release his 2013 budget proposal00:00 EUR Greek Deadline to submit a final debt swap offer13:00 EUR Coene Speaking14:30 EUR Merkel & Schauble pc16:45 CAD Duncan speaking21:45 AUD RBA's Debelle speaking

EurUsd EURUSD price action continues to make us dizzy, as the pair chops around between 1.3100 1.3300. Break of 1.3230 and 1.3289 resistances exposes further extension. On the topside, resistance stands at 1.3322 (9th Feb high), 1.3386 (12th Dec high 11) then 1.3548 (2nd Dec 12 high). Initial support stands at 1.3156 (10th Feb low), 1.3089 (7th Feb low), 1.2931 (25th Jan low), 1.2839 (19th Jan Low), 1.2588 (24th Aug low) then a lot of noise till 1.2154 (29th June low).

GbpUsd The feel good attitude has carried over to the cable. The pair made a clean break of 1.5885 and bullish tone looks to challenge resistance at 1.5928/32 (200d MA & 15th Nov high 11) then not much till 1.6167 (31st Oct high 11). Minor support located at 1.5730 (10th Feb low), 1.5699/07 (31st & 1st Jan Low), 1.5654 (30th Jan low), 1.5517/34 (23rd & 25th Jan low), then 1.5416 (19th Jan low).

UsdJpy Rise in US yields and decreased risk aversion have given the pair new lease on life. Bullish break of bearish trend ceiling located at 76.30, suggest further upside. The move should face minor resistance at 77.81 (10th Feb high), 78.29 (30th Nov 12 high), 79.53 (31st Oct intervention high), 80.24 (prior intervention high) then 81.48 (8th July high). On the downside support should come into play at 77.44 (daily cloud cover top), 76.49 (5th Feb low), 76.05 (2nd Feb low) next support will come into play around then 75.35 (31st Oct low).

UsdChf Recent price action has slightly reduces bearish tone but downside remains probable. We seem to be looking at further consolidation between 0.9103 and 0.9140. Resistance is located at 0.9265 (7th Feb high), 0.9396 (23rd Jan high), 0.9596 (9th Jan high), 0.9782 (11th Jan high) then 0.9951 (61.8 Fibo retracement). Next support is located at 0.9103 (13th Feb low), 0.9043 (30th Nov 11 low), 0.8953 (11th Nov 11 low).

S: Strong, M: Minor, T: Trendline, K: Keylevel, P: Pivot