- Eurogroup’s Juncker: Euro is “objectively” overvalued; Trichet’s Euro finance ministry won’t work; ECB working on formula to for Greece that would not be
- EU’s Rehn: EU ready to study the option of issuing Euro bonds
- Trichet: Euro has been a very good store of value; Greece did not behave properly but policies have improved from the past
- Greek PM: May put austerity measures to a referendum
- Fitch: A distressed Greek debt exchange would be considered a default
- S&P 500 falls 1.1%; US yields loss gains, end unchanged at 2.99%
- Oil falls $1.35; gold rises $3 to $1544
EUR/USD traded in narrowly range-bound fashion for most of the US session, between 1.4595 and 1.4625. It finally began to move lower during the New York afternoon after EU officials raised concerns over the value of the euro, the logistics of the Greek bailout and even broached the subject of a referendum on the Greek austerity measures…All that helped whip-up a fresh does of risk aversion, sending stocks lower , bonds higher in price/lower in yield and oil down below $100 again. Stops below 1.4590 were triggered and we dipped as low as 1.4557 before steadying.
USD/JPY eased back to the 80.05 level late in the day as US yield fell. USD/CHF fell once agin as risk aversion was the major theme of the afternoon.
Anyone with a long enough memory realizes how volatile markets will be if Greece does in fact put its austerity measures to a popular vote. See the French and Dutch referendums from 2005 and Irish referendum of 2008…EUR crosses could see serious downside pressure in the weeks ahead if this becomes a reality. CHF crosses would outperform in that circumstance.
