Overnight Bungee Practice

If Wednesday’s market moves in Europe are just half as volatile as they were in the relatively illiquid overnight conditions, it’ll be an ‘interesting’ day.

Just after London’s close, the euro spiked circa 80 pts to 1.3760/65, as did other risky assets amid headlines quoting an unnamed source who suggested the Prime Minister of Greece’s referendum bid was “basically dead.”

Gains were subsequently unwound after headlines indicating Papandreou  told his Cabinet that he would hold the referendum after all.

S&P closed 2.8% lower.

Then, whilst we were sleeping; a headline early in the Asian session said Greece would “vote on EURO membership in the referendum” This knocked EUR lower again (c. 70pts to 1.36301/35).

Finally [it’s probably healthy to end around here] a meeting of Greece’s Cabinet concluded still early in Asia and officials unanimously agreed to hold the referendum; and to hold it before Christmas.

Initially the expectation was to have it in January: the small surprise provided a small risk on tone.

EUR is moderately bid.

Strap in.


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