The Greek Referendum
Greece votes "NO" and the shockwaves will be felt in the week ahead.
As the forex markets began trading late Sunday, the impact of the Greek vote was significant but not overwhelming. As you can see on the screenshot below, after six minutes of trading the euro was down about 1% versus all of the other, major fiat currencies:
So, is that it? Is this latest crisis over? Hardly.
However, just like last week, you can bet that the BoJ and the SNB stand ready to intervene if they don't like the way things are headed overnight. That may keep things stable as we head toward the Comex and NYSE open on Monday...but...the Greek vote has certainly placed the ECB, the IMF and the entire "troika" in a tough spot. Why? They have two options, both of them bad:
- Renegotiate Greece's debt and face an open revolt from Spain, Italy, Portugal and other Eurozone countries with similar debt burdens. These other countries will rightly assume that if Greece can get a "debt relief" deal, then they should be able to have one, too.
- Stand firm and watch Greece default and issue drachma to pay their debts. This will, in turn, encourage other debtors listed in pint #1 to do the same.
Considering that all of this will takes days/weeks to play out, the bigger story in the hours ahead may instead be the collapsing Chinese stock market. The Chicoms have put all sorts of "provisions" in place this weekend to attempt to hold back a tidal wave of selling so we'll get a good chance to see if centrally-planned stock markets really are crash-proof. Read here and see chart below: http://www.zerohedge.com/news/2015-07-05/panic-china-central-bank-steps-bailout-stocks
As I go to post this as an overnight thread, here's where we stand with 22 minutes to go before Globex metals trading resumes at 6:00 pm EDT. The euro is down 1.25% vs the dollar and 1.8% vs the yen. In turn, the yen is UP vs the dollar by 0.5%. Therefore, regardless of the headlines and all of the other POSITIVE FUNDAMENTAL NEWS FOR GOLD, I wouldn't expect much at the open. Maybe gold will be up something like $2-4 with silver up 4-8¢. Yippy skippy.
Oh well, it's going to be a very interesting and volatile week. Be sure to keep your hands and feet inside the car at all times and enjoy the ride.