- Note: the EU open and the Game Plan have been merged this week, due to the Greek referendum. It would have been illogical to write a Game Plan prior to the results.
The Greek Population has voted "NO", rejecting the terms proposed by creditors.
Technical reaction similar to last week's weekend Gap: EurUsd down, but has not yet tested last week’s low (1.0955); EurJpy has bounced from effectively the same level as last week (133.80 last week and 133.78 today); UsdJpy is back above 122, and bears need to see some hourly closes below 122 in order to start shorting. Otherwise it's game on for bulls still.
However, the unerwhelming price action may be more a function of light liquidity and low convictions across markets than anything else. The Greek referendum followed the US July 4th holiday; price action last week was as choppy as ever; uncertainty still high.
Comments from an array of German politicians suggest that northern Europe has lost all trust in this Greek government. Greek PM Tsipras is calling for new negotiations, Greek FinMin Varoufakis has resigned. The ECB has little choice but to maintain its ELA, though capped at current levels, until politicians decide what's next. A EuroGroup meeting Tuesday sets the stage for a EU leaders meeting later that day. If politicians pull back, so will the ECB and a Grexit will be closer.
1. Themes for the Week
- UK Chancellor’s Budget statement could revise down net borrowing for 2015/16
- FOMC minutes and a slew of Fed speakers are due
- Greece Says NO, Euro most likely under pressure
- Risk Aversion will most likely show up in Jpy crosses
- RBA to stand pat although the market is pushing for cuts.
2.Who Said What
- Greeks defy Europe with overwhelming referendum “no” – Reuters.
- German EconMin Gabriel – Tsipras has torn down last bridge of compromise, other conservative German lawmakers agree, Greece may be better off outside Euro – Tagesspiegel, Reuters.
- Base case now for Greece to exit EZ – Reuters Buzz.
- BoJ Gov Kuroda – Monitoring market moves carefully after Greece vote, economy continues to recover, inflation likely at zero for now, to maintain QQE for as long as needed, will adjust policy as needed, fin’l system stable – Reuters.
- China takes more drastic action to halt market slide, suspends all IPOs, brokers-fund managers to invest at least US$19 bln in shares, to set up stabilization fund – Wall Street Journal.
3. Calendar
CET Times - Source: Investing.com
4. Asian Equity & FX Roundup
Easy to understand what's going on in equities. Risk-off, gap open lower, negative performance during asia. Shanghai stock exchange is a mess...up on Chinese stimulus, down after the hot money rally. We look like we're about to burst the bubble over there.
With new lows in the indices, the path of least resistance is downward.
However the rumour mill is active, and we are likely to see more risk on/risk off
shifting each session.
In FX space, Aud & Nzd look like the clearest trending
candidates still this week.
Good Luck!
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