It looks to be a warm weekend in London, but in European capitals the atmosphere has got a lot more fetid. Greece’s decision to shut banks over the weekend is just the most dramatic element of a crisis that has spiralled out of control. There was always the risk that participants would miscalculate in a fashion that echoes the mistakes of August 1914, with the end result being a ‘worst-case’ outcome. Overnight indices have moved sharply lower, with the euro selling off as well, while in the bond markets yields on Spanish bonds are rising sharply. Many in the eurozone believe that they have created the necessary firebreaks to stop contagion, but that theory will be sorely tested, perhaps to destruction, in the coming days.
Time has almost run out to keep Greece in the eurozone, but even now it is perhaps unwise not to discount the possibility of an emergency package that will avert disaster. Although this will simply defer the hard questions, having looked over the precipice, eurozone leaders may well blink. Ahead of the London open, we are calling the FTSE 100 down 150 points, at 6603, following the lead of its peers on the continent.
This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
Recommended Content
Editors’ Picks
AUD/USD retargets the 0.6600 barrier and above
AUD/USD extended its positive streak for the sixth session in a row at the beginning of the week, managing to retest the transitory 100-day SMA near 0.6580 on the back of the solid performance of the commodity complex.
EUR/USD keeps the bullish bias above 1.0700
EUR/USD rapidly set aside Friday’s decline and regained strong upside traction in response to the marked retracement in the Greenback following the still-unconfirmed FX intervention by the Japanese MoF.
Gold advances for a third consecutive day
Gold fluctuates in a relatively tight channel above $2,330 on Monday. The benchmark 10-year US Treasury bond yield corrects lower and helps XAU/USD limit its losses ahead of this week's key Fed policy meeting.
Bitcoin price dips to $62K range despite growing international BTC validation via spot ETFs
Bitcoin (BTC) price closed down for four weeks in a row, based on the weekly chart, and could be on track for another red candle this week. The last time it did this was in the middle of the bear market when it fell by 42% within a span of nine weeks.
Japan intervention: Will it work?
Dear Japan Intervenes in the Yen for the first time since November 2022 Will it work? Have we seen a top in USDJPY? Let's go through the charts.