I wrote a month ago on this blog that is was time to buy CAD, EUR, and other risk currencies like AUD. (How Grexit Will Affect Currency Markets) I still think this is the case.
Markets hate uncertainty and Greece has been nothing but one big pile of stinking uncertainty for months now. That is about to change. The market will have clarity very quickly.
I believe Greece will default on the three hundred or so billion euro they owe the Troika. There is no way they can service this debt, much less pay it back. Frankly, they don’t have the will to repay. I believe this has been their aim all along and the last few months have just been some kind of game. The Leftist regime has been planning a Grexit since the election. Marxists don’t pay money back, period, especially not three hundred billion euro.
So what’s going to happen in the FX markets? With uncertainty gone, the dollar and the pound, the safe-haven currencies, will sell off and money will flow back into the risk currencies. Right now, that means EUR, CAD, AUD, etc. So, in my estimation, you still have time to sell dollar and sterling, and buy the loonie and the euro. Once the uncertainty is removed, these currencies could pop.
Todd Wood is a former emerging market debt trader with 18 years of Wall Street and international experience. He is also an author of historical fiction. His first of several thriller novels, Currency, deals with the consequences of overwhelming sovereign debt. He is a contributor to Fox Business, Newsmax TV, Washington Times, and others. LToddWood.com