The Greeks have spoken and the markets have totally ignored them. Yesterday saw the Greek people unanimously vote for NO in the country’s referendum on whether to accept the terms of the EU bailout.
With over 61% of people voting NO the move is a significant one that could’ve had huge repercussions for global financial markets. The outcome of the Greferendum means that it has pushed Greece ever closer to the brink and the possibility of leaving the Eurozone. With a Grexit now a very real possibility, it is now also the fear of contagion that will start to spook the markets.
It’s the market reaction that has been the thing that has taken everyone by surprise, or should we say lack of market reaction. As the results were coming in yesterday you would have been forgiven for thinking we may well have seen parity on EURUSD by midnight and huge falls on the major indices this morning, however that is very much not the case. EURUSD has yet again shown its resilience by rebounding the majority of its losses felt on the open on Sunday night, while the major indices approach the close down minimal amounts.
The poll eToro conducted last week to our Greek clients gave the exact same 61% result to the NO camp , while the poll to the rest of our client base showed a split with 51% of clients in the YES camp. The problem we now have is that we are back to the negotiating stage, and any kind of decision on an exit from the Eurozone or a new bailout deal could well be weeks away. However the fact that Greek banks are literally running out of money by the day means that we could well see some kind of interim deal.
Like a lot of our clients, Popular Investor @fallond has been looking to get away from the risk of euro denominated assets and those with bigger exposures to Greece by looking towards cable. Declan wrote “the referendum results are in and cable was relatively unaffected by the result. Still lots more in the Greece Story to come, but maybe a chance for the bulls to work something. Trading a 200MA on the 4 hour chart is a potential opportunity for those with a longer term play”. Our current sentiment readings are showing that after the referendum the major opinions remain the same, with 57% of clients trading EURUSD still short and the 73% long the German DAX.