Greece unravels as Capital Controls imposed

Australian Dollar:

The Australian dollar has been forced lower in early trade as markets respond to the escalating Greek credit crisis. Risk appetite has been sucked from the market as the threat of a Greek default increased at the weekend with the ECB freezing increases in lending support forcing the introduction of capital controls. The Aussie dropped sharply careening through 0.7590 before bouncing off technical supports and rebounding back above 0.76. This morning’s move marks a dramatic shift for the AUD adding to Friday evenings sell off and marking 132 point dip and a shift outside recent ranges. The Australian dollar will likely remain under pressure throughout the week as investors look to haven currencies as the wider economic landscape remains riddled with uncertainty.

• We expect a range today of 0.7530 – 0.7720

New Zealand Dollar:

Having closed last week buying 69.01 US Cents the New Zealand dollar has slumped to a five year low upon open this morning. Dropping sharply and slumping to a low of 0.6805 when valued against its US Counterpart investors have flocked to safe-haven assets this morning, a move triggered after Greece and its creditors failed to reach an agreement at the weekend ahead of a June 30 debt repayment deadline. In a result likely to favour the US dollar ahead of a planned referendum on new bailout terms on July 5, the week ahead promises to be one full of fireworks. Given the backdrop of heightened uncertainty and volatility interim support lies ahead at the 0.6790 followed by 0.6750.

• We expect a range today of 0.6750 – 0.6850

Great British Pound:

Following in the footsteps of a basket of other major units this morning, the Great British Pound has lost significant value when paired against its US Counterpart. As part of the world’s global shift towards safety, markets remain poised for a week of turmoil following the decision by Greek Prime Minister Alex Tsipras to call a referendum on the reforms demanded by the EU and the IMF. In a move effectively guaranteeing a technical default on the $1.5 billion Euro owned to the IMF on Wednesday, its expected broader risk parameters will continue to favour the Greenback this week, in the absence of a clear road map for the foreseeable future. Opening weaker against the US dollar this morning at a rate of 1.5662, the Sterling is holding up when valued against both the Aussie (2.0569) and the Kiwi (2.3015).

• We expect a range today of 2.0500 – 2.0620 and 2.2940 – 2.3050

Majors:

The Euro plunged downward on open this morning as Greek officials failed to strike a deal with creditors over the weekend. Having closed Friday buying 1.1165 the single currency lost 175 points on open as risk appetite vanished and the threat of a Greek default increases. Prime Minister Tsipras stunned officials and markets in calling for a deferral in Tuesday’s 1.6 billion Euro IMF debt repayment to allow a referendum on bailout terms. The request only heightens political uncertainty and will surely serve to undermine the authority of Tsipras and his leftist government should Greeks choose to reject the current bailout proposal next Sunday. As the threat of default looms ever closer international creditors have refused to extend bailout loans until current terms are agreed and the ECB has frozen the level of Funding support available to Greek banks. In response Greek Banks have introduced capital controls limiting the size of cash withdrawals and declaring bank holidays until after the Sunday referendum. The integrity of the Euro will be tested as events unfold over the coming days and week as investors look to safe haven assets (JPY, CHF and USD). The wider consequence remain unclear and it is unlikely traders will be pushing positions outside haven plays.

Data releases:

• AUD: No Data
• NZD: No Data
• JPY: Retail Sales y/y and Prelim Industrial Production m/m
• GBP: Net Lending to Individuals m/m, M4 Money Supply and Mortgage Approvals
• EUR: Spanish Flash CPI and German Prelim CPI
• USD: Pending Home Sales