ECB ELA scenarios today

The members of the governing council of the ECB are meeting today in Frankfurt. This is a regular meeting of the governing council, not a sure shot meeting to decide the fate on Greek ELA, as many might assume.

Nevertheless the Greece scenario is sure to be discussed. Different probabilities and their impacts are:

• Complete withdrawal of emergency lending assistance (ELA) to Greek banks, to our view unlikely but a probable date or timeline could be mentioned. In case of former, Euro will be very bearish and may break below 1.11 but the second scenario could prompt the Euro to be mildly bearish focusing on the finance minister's outcome.

• No action on the Greek issue, to our view very much likely as ECB could announce such on a later date. In Such case Euro will gain ground, but won't be very bullish.

• Partial Withdrawal of the ELA, to our view highly unlikely as ECB recently increased the fund by € 5 billion to € 65 billion. In such a case euro will be bearish depending on the amount and possibly won't break below the recent low.

Current the EUR/USD exchange rate is trading at 1.1375 down 0.25% for the day.