Global Markets React To Greece Uncertainty After No Vote

The euro took a big hit as markets opened on Monday morning initially falling to the $1.09 before steadying at 1.1044 down 66 points. The Japanese yen and the US dollar have been the benefactors of safe haven trading after the Greeks voted to decline the Eurogroup bailout offer. The greenback added 16 points to 96.54 while the yen added 22 points against the dollar, against the euro the yen added 106 points as the pair soared to 135.39. The European currency fell sharply in early trading amid growing uncertainty over Greece’s future in the Eurozone, before showing a modest rebound in Tokyo time on “bargain-hunting” buying, dealers said. Greek Prime Minister Alexis Tsipras declared victory after a majority of voters cast a “no” vote in the referendum, putting the country closer to an exit from the euro.
“The market was surprised that more than 60 percent voted ‘no’ given the expected close call between ‘yes’ and ‘no’ votes,” said Yuzo Sakai, manager of foreign exchange business promotion at Tokyo Forex & Ueda Harlow.  “What happened was similar to the movement last Monday,” said Sakai, referring to the euro’s sell-off after Eurozone finance ministers failed to reach a deal to extend financial assistance to Athens beyond the June 30 deadline for its 1.6 billion euro payment to the International Monetary Fund.

Asian stocks stumbled on Monday after a Greek vote against austerity measures endangered its future in the single currency and raised the risk of a full-blown crisis in the euro zone. US equity futures dropped around 1.2 percent though they were off early lows. Japan’s Nikkei share index fell 1.4 percent while MSCI’s broadest index of Asia-Pacific shares outside Japan dropped 0.5 percent.  Diverging from the global trend was China’s stock market as the PBOC offered support measures over the weekend prompted a much-needed rally. The People’s Bank of China will inject capital into China Securities Finance, which is owned by the securities regulator, according to the statement by the China Securities Regulatory Commission. The company will then use the funds to expand brokerages’ business of financing investors’ stock purchases. The latest move comes as Chinese authorities are scrambling to stem a stock-market slide that officials fear could spread to other parts of the world’s second-largest economy.

Commodity currencies tumbled as the US dollar gained and global commodities tumbled with oil continuing its 4 day rout. Industrial metals fell significantly along with other global commodities.  The Aussie eased by 22 points to 0.7494 breaking through its support level at 0.75. The kiwi dipped by 10 points 0.6682 hitting a 2015 low. While the USDCAD soared 40 points to 1.2614 was the Loonie touched a new low.

EUR/NZD: buy target – 1.6800

EUR/NZD has been rising steadily in the last few trading days inside the minor impulse waves (iii) and 3 (as can be seen from the daily EUR/NZD chart below) – recently reaching the resistance level 1.6600 – top of previous impulse (i), which was set as the buy target in our previous forecast for this currency pair.

After reaching the resistance level 1.6600, EUR/NZD corrected down shortly– after which it resumed the upward movement and is approaching this price level at the time of the writing. If the price breaks above 1.6600, EUR/NZD can then rise to the next buy target 1.6800.

AUD/USD: possible upward correction to 0.7450

AUD/USD recently broke sharply down through the support zone lying between the support levels 0.7550 and 0.7620. This support zone has been repeatedly reversing up this currency pair from the middle of March –as you can see from the daily AUD/USD chart below. The breakout of this support zone intensified the bearish pressure on AUD/USD – accelerating the active minor impulse wave 3.

The price might correct up to the resistance level 0.7550 – from where the pair is likely to reverse down toward the next strong support level 0.7450.

AUD/USD Forecast July 6, 2015, Technical Analysis

The AUD/USD pair fell during the course of the session on Friday, testing the 0.75 handle. This is an area that is supportive based upon the large, round, psychologically significant number, and of course an area that has both been supportive and resistive in the past. With that, a bounce from here would be a nice buying opportunity for short-term traders only. On the other hand, a break down below the 0.75 level has us selling the Australian dollar yet again as the longer-term trend continues to the downside. We are sellers all things being equal.

EUR/CHF Forecast July 6, 2015, Technical Analysis

The EUR/CHF pair fell during the course of the session on Friday, breaking the bottom of the shooting star from the Thursday session. Because of this we feel that the market should continue to go lower, probably heading all the way down to the 1.03 level given enough time. With that, we are very bearish but also recognize that it won’t necessarily be the easiest trade to take. Ultimately, this market should continue to be range bound between the 1.03 level on the bottom, and the 1.05 level on the top. With this, we continue to trade short-term.