Euro Plunges, Greece Into The Abyss

Greece called a referendum and the ECB pulled the plug on emergency funding in a dramatic weekend.  EUR/JPY is nearly 400 pips lower as risk aversion grips markets in what will be a historic week. CFTC positioning data showed fresh US dollar buying. The Premium EURJPY short was stopped out, while the remaining 4 trades remain in progress.

It's fireworks at the open as EUR/USD falls 185 pips to 1.0980 in thin, early trading. The yen is massively bid across the board.

Greece called a referendum for July 5 on the bailout proposal but the deadline to pay the IMF is June 30. After the snap referendum, the Troika opted not to extend bailout operations, including the ELA. Capping that program at current levels means it will be very tough for Greek banks to get cash and they will be closed on Monday. The Greek stock market will also be closed Monday and it could remain that way all week.

What next? These is no easy way out. Even if the public votes to accept the bailout extension terms, it's not even clear they're still on the table. If the deal is rejected, it will solidify the Greek default and assure an extended period of capital controls.

The week ahead features a raft of top-tier economic data but suddenly the most important news of all will be referendum polls. Volatility will be extremely high and sentiment shifts will be rapid.

Commitments of Traders

Speculative net futures trader positions as of the close on Tuesday. Net short denoted by - long by +. EUR -99K vs -89K prior JPY -88K vs -80K prior GBP -22K vs -25K prior AUD -9K vs -4K prior CAD -18K vs -12K prior CHF +7K vs +5K prior

The market dipped into US dollar longs after the dust cleared from the Fed.  The euro short trade isn't as crowded as it was a month ago, but it will be in next week's data.