The Week That Was…
All eyes were on Greece this week with a will they won’t they back and forth on the proposed debt deals. Tuesday came and went and Greece officially went into default on the IMF repayments. Frankly it seemed of little surprise to many market participants.
We end the week with a Greek referendum on Sunday to vote yes to proposals put forward by creditors but we expect another choppy next week on continued debates regardless of what the actual referendum vote is. The reality of the situation in Greece now is that a solution is likely to drag on and any interim fixes will most likely need to be revisited in the short term. This could result in a pretty nasty July for choppy, fragile and headline chasing markets.
Elsewhere in the markets we saw relatively choppy price action as the markets attempted to adjust for whatever headlines occurred out of Greece.
Monday saw a gap lower which then set the range for the week as currencies mainly then corrected that initial gap. In fact for most Currency Trading Firms 29th of June (Monday) now ranks as one of the worst ever trading days in recent history, even compared to the financial crisis. Therefore if like us you did ok this week, you are doing something reasonably well, however be warned of more again next week.
- USD after gapping higher at the start of the week the USD then retraced teh whole move then spent the week retracing towards the gap open. Pretty choppy price action and we expect more of the same next week as the situation in Greece still won’t be resolved. NFP came in slightly below expectations on Thursday (Friday was a holiday in the US) but it still aligns to rate hikes this year and was heavily overshadowed by Greece commentary.
- EUR The situation in Greece over the weekend and no resolution to the IMF payment due on Tuesday saw the Euro gap lower on Monday, then retrace the entire move in a single day only to pair itself back towards Monday’s gap low by the end of the week. the pair looks relatively week but we expect some pretty large movements out of the Greek referendum vote on Sunday although we suspect the situation will still be a long way from resolved and the week could then get incredibly choppy.
- GBP suffered from relative weakness this week. minor gap on Monday was followed by some persistent weakness throughout the weak, partly caused by USD strength on moves against the Euro. Without general USd strength though UK data this week was reasonably good and the UK seems on track for Carney’s recovery plan.
- JPY mainly suffered from cross flows in Euro, USD and Aussie. Some big moves early in the week paired alongside the moves in Euro and USD.
- AUD suffered at the hands of poor economic data this week continuing its run lower. Poor trade balance and economic indicators potentially suggesting that further rate cuts could be in store for Australia. Low volume on Friday caused it to suffer at the hands of relatively fragile markets.
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