Greece has voted, with a decisive ‘No’ the outcome to the referendum over whether to accept bailout conditions set last week sending the Euro below 1.10.
The ruling party in Greece led by Alex Tsipras were pushing for a ‘No’ as they believe that they will have a better position to negotiate from leading to a better deal. Over the weekend, the Finance Minister Varoufakis likened the ‘Troika’ or creditors to terrorists, spreading fear among the people, seemingly employing a tactic of insulting those he needs help from before returning to the negotiating table.
Just after the result became clear, the president of the European Parliament, Martin Schulz, said that the ability of Greece to now negotiate a better position “is in my eyes not true” whilst also adding that the promises to open the banks as “very difficult and dangerous.” Showing just how dire the situation in Greece has become, he said that they should begin to discuss humanitarian aid.
What would have normally been a quiet start to the week after the 4th July holiday in the US has not turned out that way due to the continued uncertainty in Greece. The EURUSD gapped around 100 pips over the weekend whilst EURJPY was a big mover, falling over 200 pips.
We’re now back to where we were over a week ago – continued uncertainty is the order of the day. Greece thinks they’ll get a great deal which will allow them not the make the austerity cuts that the ECB, EU and IMF believe are absolutely essential, whilst those key creditors appear to disagree strongly.
Uncertainty often leads to negativity as people look to prepare for the worst and until the next round of talks begin and we get an idea which way it will pan out, we would continue to see the Euro slide.
Today sees little other news with US ISM Non-Manufacturing PMI and Canadian Ivey PMI the biggest releases both out at 17:00 GMT 3. The figures are forecast for 56.5 and 56.2 respectively.