Greece has yet again been dominating the weekend press after announcing that it will hold a referendum on whether to accept the new terms of a bailout proposed by the countries creditors. However Christine Lagarde, head of the IMF has stated that any referendum could potentially be irrelevant by Tuesday if Greece failed to pay the IMF the €1.6bn they owe.
Of course talks continue to go on and we could still get a resolution to the slow motion car crash that is the Greek economy within days but that doesn’t help those looking to trade the markets. So far this morning markets have fallen off a cliff and this is no surprise considering the massive amount of uncertainty that we have seen over the last couple of weeks and the developments over the weekend.
The euro has obviously been a major focus for most traders and after plummeting below 1.10 on the open on Sunday night it has since recovered and has been trading only marginally below Friday’s New York close of 1.1160. Equity markets have taken the main brunt of the pain with the DAX losing over 4% on the open and the FTSE MIB down over 900 points.
So what’s the potential end game here, well I think the answer is that we really do not know. This week really now holds very few answers until we get to the referendum on Sunday. In essence Alexis Tsipras has asked the Greek people for a vote of confidence, saying more or less that you gave me this mandate beforehand, do you still want me to take this route. Tomorrow will see Greece officially default on its payment to the IMF which directly contradicts Eurozone membership rules.
There are now 3 key dates to look out for, firstly tomorrow 30/06/15 the date the IMF payment is due, secondly we have the most important day which is Sunday’s referendum 05/07/15, then finally the 20/07/15 which is the date €3.5bn is owed to the ECB, and a default on this date would almost certainly lead to the dreaded Grexit.
This morning Jean Claude Juncker gave a speech in which he spoke of his disappointment and the feeling of being betrayed by Greece. He also stated that a Greek exit from the Eurozone has never been part of his plans and they are still fighting at all costs to get a resolution to the problem.