Wise words from the French Bank
On Wednesday I highlighted the possible risks to markets as the week wound down, particularly the possibility of increased volatility with lower liquidity due to the US holiday. Credit Agricole take a look at what could drive prices over the Greek vote and what it could mean for the early opening next week
They say that the biggest risk could be in the yes vote
"Indeed the greatest risk could lie in a 'Yes' and thus a back-firing of Tsipras and Varoufakis plan to gain greater leverage over its European creditors. Such an outcome could make for a highly volatile EUR/USD in thin trading Monday morning.
In particular, should initial exit polls signal a 'no' vote (ie. in public protest) only to then be followed by a slow drift towards a 'yes' throughout the evening as each constituency is counted, EUR/USD price could easily catch traders wrong-footed."
If you're not already, then planning for a similar or greater move in markets on the Sunday/Monday open, to the one we saw last weekend is paramount. Make sure you are fully aware of your brokers T&C's over gap prices and where you could get filled at.
I'm inclined to think that Greece will vote yes in the referendum as it's known that the majority of Greeks want to stay in the Eurozone and that's what most of the people will be seeing this vote as. If that does happen then we're likely to gap up on the basis that Tsipras will be forced to take the deal on the table and at last put a temporary line under this saga. Then we'll get back to trading the negotiations as they happen, again, and again, and again.....
For more notes from the banks check out EFX News
