Markets Nervous Ahead Of European Summit and Possible Greek PSI Deal

• USD and JPY rise as Gold and commodity currencies trade lower in Asia
• Markets nervous ahead of European summit and possible Greek PSI deal
• EURCHF remains under pressure ahead of barrier at 1.2050 and peg at 1.2000
• European equity markets fall on opening as Dollar rebounds and risk drives currencies
• Gold falls back as Oil heads lower. Talk of stops under $1715 helps selling pressure in early European trade

Good morning. The EURUSD managed to break above 1.32 late in the session on Friday as rumours abounded of a possible Greek PSI deal for today.

That helped lift the price has high as 1.3233 ahead of the New York close, despite news that rating’s agency Fitch had downgraded a number European countries.

Understandably given that positive weekly close the price rose in Asia from the opening to reach as high as 1.3234 before falling back ahead of the European opening.

As far as what the price does from here it’s a tough call. The whole EUR up or down dynamic seems to rest with what the catalyst is that comes out of Greece today.

The talk is that the private bond holders have agreed to a lower coupon of between 3.5-4%, but as I write this there is no confirmation of that and a degree of nervousness has set into the market.

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Asian equity markets are therefore mostly lower and the USD and JPY mostly higher. Gold has rebounded off fresh 2 monthly highs and the commodity currencies have all fallen back.

EURGBP traded over 0.84 overnight, touching 0.8410 before slipping back in Asian trading. The recent price action on this one has been particularly tough and very difficult to trade as it seems to have been dominated by conflicting fixing orders.

The latest one being on Friday which may have been the usual RHS month end order, but I cannot confirm that so we might see more of the same price action either today or tomorrow, particularly if those orders are yet to come to the market. However, my hunch is that it’s been done already but we wait and see.

Turning back to this morning’s market the EURUSD has drifted lower as risk comes off and the USD and JPY gain. European equity markets have understandably opened lower following the negative Asian session.

That has all helped the USD index break back above 79.00 following earlier losses under the Fibonacci level at 79.08 from late Friday evening.

Europe hasn’t seen the EUR above 1.3200 and there is of course a chance that we get another rally at some point this morning dependent upon what news breaks out of the EU summit or the Greek PSI talks.