ECB raises Greek ELA ahead of summit

European Central Bank (ECB), which already has record exposure towards Greece as a percentage of GDP raised the exposure further ahead of European emergency summit to resolve the Greek crisis.

• Greek uncertainty has been taking toll on Greek banks, which bled liquidity heavily last week. Last week alone, some € 4.2 billion were withdrawn and Friday accounted for almost 25% of the withdrawal.

• ECB has been raising the Emergency liquidity assistance cap steadily in gradual manner. Last Friday, it raised the cap by some € 1.8 billion to total € 85.9 billion. Today it has raised the cap after emergency telephonic discussion among members. The amount is not yet known. Members are scheduled to hold another telephonic conference to raise the cap in next 24 hrs.

While people of Greece remains cautious over the summit, fearing capital control that might get imposed on banks, market is very optimistic over the summit.

Greek bonds are having one the best times it had in last three years. Yields in last three days have dropped largest in three years. Greek 10 year yield has dropped close to 11% from 13% just 2 days ago.

Euro is buoyant against most of its counterparts. Euro is currently trading at 1.1355 against dollar, 0.7165 against pound and 139.9 against Euro.

Going long Euro against Dollar remains attractive, however one might choose pound and Yen instead to avoid dollar risk.

Euro- Yen remains very attractive to play upside. Initial target is around 145.