So far, so good. Or at least, not so bad.
Traders’ worst fears following Greece’s No vote on Sunday have not been realized, with both equity and currency markets remaining relatively calm in the aftermath of Greece rejecting the EU’s bailout terms and embarking on a still yet unknown path in dealing with its financial problems.
About an hour into trading Monday, European equity markets were down but not in disaster proportions. Germany’s DAX and France’s CAC-40 were taking the worst hit, down in the 1.2%-1.3% range. The UK’s FTSE was off less than one percent.
And in the FX world, after a 1.2% drop in the Euro versus the US Dollar immediately after the magnitude of the No victory became apparent Sunday evening, the currency world has stabilized on Monday. The EURUSD recovered much of that lost ground and now sits at about 1.11 – right where it was before the weekend.
EURUSD chart Monday July 6 showing Euro strength. Source: FxPro.
The one main hint that negotiations between the EU and Greece to redo the package are already underway was today’s surprise resignation of Greek Finance Minister Yanis Varoufakis. Pre-referendum speculation was that Varoufakis – and possibly Greek Prime Minister Alexis Tsipras – was going to resign if the ‘Yes’ vote won. However, Varoufakis’ departure now, even though his side won, seems to indicate that the Europeans are going to bend some more in their demands, but just didn’t want him in the room.