The Greeks Vote NO

Yesterday the Greek referendum took place and overnight as the votes were counted it showed the Greek people sided with their prime minister and voted No to the IMF’s austerity package, with many now saying it is a vote to leave the EU. We have already seen the first casualty of the vote, as the Greek finance minister has resigned and the rest of Tsipras’s government are meeting to decide on his replacement.

So far markets have acted indifferently to the news, with the pound to euro exchange rates initially spiking up in favour of the pound as Asian markets digested the news but only by a cent and a half, not nearly as much as the previous spike we saw two weeks ago. This rally was quickly halted though and as European foreign exchange markets open, the rates are back down a cent.

Greek bonds are up, while banking stocks are down. The US dollar, being on the other end of the currency see saw, has done the reverse to the euro and is currently trading down against the pound, good news for anyone needing to pay those Far East invoices or buy their dream home in the Florida sun.

So what next for Greece? The answer is we just don’t know. Some will expect this means an exit for the EU country, but will the other main powerhouses of Europe let this happen? Allowing an exit means its very unlikely the Greeks will ever pay the debts back, which is a precident the IMF and ECB will not want to set with so many other EU cou ntries owing money. SO we will have to wait and see how this plays out over the coming days and weeks, which will almost certainly lead to market volatility.

This week we have a few data releases to throw into the mix with the highlights below:

US services PMI
AU interest rate decision
Tuesday – UK GDP NIESR estimate
Wednesday – US interest rate minutes
Thursday – UK interest rate meeting
Friday – Canadian employment data

So a busy week for all but mainly focussing on Greece, so make sure to stay in touch with your CI team for any upcoming transfers you need to make.