Greek Deal or No Deal, RBA Next

Tough talk from Greek meetings led to a swift drop in the euro but a deal might be right around the corner. The kiwi was the top performer while the euro lagged. Existing Premium trades include USDCAD, AUDNZD, and NZDCAD, with AUDNZD totalling more than 200 pips in the green. The RBA minutes are due next.

The US and Canada were on holiday to start the week so that sapped liquidity and might have led to an exaggerated move in the euro. The general theme was USD strength but we're skeptical until New York returns.

All eyes were on Brussels where talks between EU ministers and Greece took place. Early in the day, there was talk of a deal on an extension and that kept the euro pinned to 1.1410. But it unraveled as both sides appeared inflexible and the euro skidded to 1.1320.

The eurogroup is essentially insisting that the broad strokes of previously-agreed deals remains in place while Greece wants more concessions. “Any new program for Greece would not look much different than the current one,” Dijsselbloem said.

He indicated that Greece must accept that demand before Friday. The past 5 years of Greek negotiations have been no stranger to brinksmanship and this one won't be any different. On the positive side, Greece's finance minister brushed off worries and said he expects a deal within 48 hours.

There is always the risk of a blowup but the slump Monday in the euro might be overdone. Officials are discussion a 4-month extension and that's hardly the hill either side wants to die on.

Otherwise, cable was a laggard in a full cent fall after an early rally. USD/JPY stabilized near 118.45 after an opening fall. A puzzling move was USD/CAD as it climbed a quarter cent despite a small rally in oil. That may unwind as liquidity returns to the pair.

In the near-term the focus is on the Australian dollar with the Feb RBA minutes due at 0030 GMT. The decision to cut rates was a close one. Stevens said last week that “the economy could use some help, so we eased,” last week, but there hasn't been much guidance about what will happen next.

At the moment, the national pride in Australia took a hit as AUD/NZD touched an all-time low on Monday.