1. SYNERGY FX ALERT
BY TODD DEITERICH | 15.06.15
PLOT POINTS AND CAPITAL CONTROLS
As financial markets prepare for the FOMC meeting on Wednesday, the focus has moved away from "if" the
FED will begin normalizing US interest rates to "when and by how much."
One of the key indicators of rate guidance will be the plot points submitted by each voting FED governor during
the meeting. Simply, these plot points represent the personal estimates of the trajectory of the US yield
curve over the next few years.
Now that Q2 economic data has proved Q1 data to be a transitory soft patch due to winter weather, market
participants will be looking for any changes in the forward guidance to gauge the timing and magnitude of the
cost of future borrowing and deposit rates.
Last Thursday, the FED awarded $90.8 billion in reverse repurchase agreements at a rate of 22 basis points.
Using this rate as a starting point, the market has priced in 25 basis point of Fed Funds tightening between
now and December which further underscores the divergent monetary policy direction between the US and
other G-7 central banks.
If the FOMC plot points have a more hawkish trajectory than what is currently priced into the market, the USD
could extend higher from the current ranges against the major crosses, in general and against the EURO,
specifically.
The EURO has started the week on the back foot as negotiations with Greece failed to produce any material
changes over the weekend. In fact, the general tone of the talks were reported to still show "significant gaps"
between the Greek plan and what the creditors are willing to accept.
Synergy FX believes growing risk to the protracted negotiations is the installation of capital controls to Greek
banks. Deposit out flows from Greek bank accounts has increased over the last three weeks which has to be a
troubling sign to the ECB.
Greek banks have tapped the ECB Emergency Lending (ELA) facility for over €90 billion over the last two
months. We believe that there is a point of convergence when the Greek collateral runs out and the ECB shuts
off the tap which would effective collapse the Greek banking system.
Synergy FX believe the market has underestimated this potential risk and the negative impact on the Euro
currency. The EUR/USD traded below the 1.1175 level on Friday but regained the 1.1200 handle into the
weekend. This still looks to be a key pivot level for adding or establishing short positions for an initial target of
1.1060. Only a trade back above 1.1385 negates the short-term down trend.
We still prefer the long side of the USD/JPY but would like to buy closer to the 30 day moving average near
122.10 (see chart). In the meantime, we suggest short-term traders can look to sell EUR/JPY at 138.45 for an
initial target of 135.80 with a 141.00 stop.
The AUD/USD hit our intraday sell target of .7740 from Friday's update but is still in a range above .7700. The
pair is still below the 30 day moving average at .7822 but holding above the pivot level of .7670 (see chart).
We don't see tomorrow's RBA minutes posing any upside threat from here and still target .7600 in the near
term.

2. The GBP/USD hasn't given us a clear trade signal but the EUR/GBP switched the daily parabolic indicator short
at .7210 on Friday. Synergy FX will look for a trade set up on this cross during the week.
SYNERGY FX