A Decisive No Victory in Greece
Our screens are covered in red this morning, following the decisive victory of the NO side in Greece. After the result was made public, Finance Minister Yanis Varoufakis resigned, which should facilitate negotiations with the rest of the European Union. The impact of the vote is being felt across all asset classes. The winners of the resulting volatility are the U.S. dollar and bond markets, while stock markets and crude oil prices are having a tough morning.
European leaders will meet tomorrow in Brussels, with a Grexit appearing more and more possible. The pressure is now on Angela Merkel, with the Greek side having more negotiating clout. Now we’ll see whether the German chancellor will accept the hand being held out to her.
Given the current situation, the greenback is reverting to its major role as a safe haven, and this is translating into gains against most major currencies. These moments of volatility represent good opportunities for USD sellers to increase their hedging levels by using forwards and options.
