Greek Talks Fail, Euro Falls

 Greece's 'red lines' on pensions really weren't up for negotiation. That was evidently all creditors needed to hear before walking away from the table in just 45 minutes on Sunday. The euro is significantly lower in early trading and no further talks are scheduled. CFTC positioning data showed yet another jump in yen shorts.  

Ahead of the weekend, Juncker said he wanted an agreement before markets re-opened. Many market participants assumed both sides were grandstanding and would finally compromise this weekend. Those illusions are now shattered. 

 "One can discuss a gap, but this is an ocean" an EU source cited by Reuters said. Greece owes 1.8B euros to the IMF at month-end. Even an agreement today would have been a tough deadline due to the lack of time for technical work and time for national parliaments to vote. 

In short, unless Greece can scratch together more money (doubtful), time is up and Athens will default. EU Ministers meet July 18 but that's likely to be a meeting about what to do when Greece defaults, not a deal.

 The euro is a half-cent lower at 1.1216 in early trading. It's been resilient in the past week but this will be a major test. We'll closely watch Greek markets, Bunds and the European open.

 Commitments of Traders

 Speculative net futures trader positions as of the close on Tuesday. Net short denoted by - long by +. 

EUR -138K vs -165K prior 

JPY -116K vs -86K prior 

GBP -28K vs -26K prior

 AUD -14K vs -13K prior 

 CAD -14K vs -1K prior 

CHF +10K vs +8K prior 

 In three weeks, the yen net short position jumped by nearly 100k contracts. The rush into the trade was what left the market vulnerable to the quip from Kuroda last week about the yen not falling further. ‎Risk aversion leaves USD/JPY at risk of falling further.