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Capital controls begin in Greece
Considering that both Greece and its creditors ultimately want the same thing — Greece to remain in the eurozone — their inability to reach an agreement is all the more staggering. What has left traders even more perplexed is the decision of the ruling Syriza party to hold a referendum on a proposal that will have been removed from the table before voting even starts.
The ability of the average Greek citizen to fully comprehend these two highly technical documents is unlikely and this action smacks of Syriza shirking its responsibilities and passing the buck onto the Greek population. Today has also seen the start of capital controls and queues outside Greece’s ATM machines now snake around the block creating a succession of disgruntled conga lines.
NFP to announce on Thursday
Starting a short week with the prospect of 4 July celebrations at the end would normally see US traders bouncing into the office. Once again though, Europe is doing its best to knock any sense of optimism out of traders with an almost incomprehensible proposal from Greece and a Teutonic stubbornness from the creditors.
As a consequence of this, Friday’s markets are closed and the all-important non-farm payrolls will be announced on Thursday and not Friday. The current travails of the Greek economy are not enough to worry the US but the knock-on consequences to the eurozone are enough to see a palpable hesitancy come over the Federal Open Market Committee as the timeline for interest rate rises has remained a prospect for a future as yet no nearer to happening.
Gold under pressure
Gold’s status as a safe haven investment is once again under scrutiny. While the possibility of Greece leaving the eurozone increases and fears over a contagious domino effect on other member states are assessed, even with this great unknown hanging over the market, the precious metal has hardly moved.
Oil prices have fallen as once again the Chinese central bank has felt the need to cut interest rates and the pace of growth in China comes under scrutiny. As Europe stalls and the US hesitates there are precious few economic regions that look set to pick up even more slack in the oversupply to the markets.
SNB move to stabilise Swiss Franc
Europe might well be a step or two closer to some sort of end result but what that might be is still as unclear as it has been for the entire month. Syriza certainly surprised the markets with its decision to hold a referendum but the initial currency market reaction has almost worked its way back to where we were before the weekend started.
The Swiss National Bank have decided that enough is enough and have acted to stabilise the strong Swiss Franc as worries over the eurozone escalate.