Increased volatility but inside narrow ranges was the theme of the market during the first session of the week for the major instruments we monitor in a daily basis. A day after the No vote from the Greeks in their referendum over the weekend and the global money markets have taken it better than expected.
After their initial bearish reaction most instruments have recovered from their losses and are now holding a waiting stance. Investors and policymakers are now waiting for Greek PM Tsipras’ move as he heads to Brussels to discuss new terms after his people rejected the latest Eurozone proposal. Yesterday however he took out of the picture his radical former Finance Minister Varoufakis that was considered too difficult to work with and replaced him with Mr. Tsakalotos, a pro-Euro economist.
The latest developments have allowed Euro to remain afloat still as traders are waiting to see what Tsipras will propose to the Eurozone while at the same time he has little time to come to a deal. Over the past 24 hours the ECB increased collateral demands from the Greek banks to sustain ELA at its current levels and time is running out. The Euro spent yesterday range-trading between the 1.1000 and 1.1100 levels and we expect a similar price action today until we get fresh news from Brussels.
On the other hand, the Cable was able to benefit from all this uncertainty and posted gains against the Dollar. The British currency has been receiving flows from both the EUR/GBP pair but also as a safer haven for European investors contrary to the European banks. The level to beat though is the 1.5650 area and it will be interesting to see how the Cable will react today to the release of the Industrial and Manufacturing Production reports.
Finally taking a look at the FTSE 100, the London index continued to find strong support ahead of the 6,500 points’ area and today we could see an attempt to rally higher. The first barrier will be the 6,600 points’ level and it will take a lot of effort to overcome this resistance, however should the FTSE be successful then the 6,650 and 6,680 highs will be on focus.
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