Juncker Assaults the Euro

Eurogroup president Jean-Claude Juncker questioned if the IMF would release its next disbursement of aid for Greece, according to Dow Jones. While the euro had initially been up on the session, news of Juncker's statements may have driven the euro down against the dollar, as the currency pair entered negative territory for a moment before returning to a modest gain on the day. Juncker stated that he could not speak for the rest of the IMF, but pointed out the fact that, due to the IMF's rules, Greece can only receive aid if it can demonstrate that it will have financing for the next 12 months. If the IMF cannot lend Greece aid, then that role may fall to the rest of Europe. Or China, given its recent willingness to support Portugal. Investors should weigh the situation carefully before moving forward. Given the outpouring of support, Christine Lagarde may be the next director of the IMF. As a former French government official, she may work to push the IMF in a direction that would maximize the outcome for Europe. Traders who believe that the statements by Juncker foreshadow Greece's exit from the euro can approach it from two directions. Traders may wish to play it short, going bearish on the euro. In that case, ProShares UltraShort Euro EUO might be an investment worth looking into. From a longer perspective, if Greece abandons the euro, that could irrevocably doom the currency. Germany may have to return to its own currency, which may appreciate significantly given the relative strength of its economy. However, that currency appreciation might weaken German exports. In that case, traders may look to play American exports which might become relatively cheaper compared to their German counterparts. iShares Dow Jones U.S. Industrials IYJ might allow traders to get exposure to U.S. manufacturing.