Greece Votes “No”: Markets React Calmly, Eye China

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Top Headlines

Greece Votes “No”: Markets React Calmly, Eye China – Profit & Loss (free story)
Greece’s historic referendum on whether to accept the terms of a new bailout has voted ‘no’ by a wider than expected margin. With all votes counted, the ‘no’ vote had achieved a 61.3% share, higher than the 55-58% predicted at the end of last week.

JP Morgan-Barclays Cut Greek Exit Odds as Goldman-Citi Hold – Bloomberg
Economists from JP Morgan Chase to Barclays made a Greek departure from Europe’s monetary union their base scenario, while those at Goldman Sachs and Citigroup saw ways it can remain within the bloc.

Brazil Wades into FX Scandal – Profit & Loss (free story)
A total of 15 of the world’s largest banks are being investigated on suspicion of manipulating the Brazilian currency, Brazil’s financial watchdog Cade has announced.

What the Brazilian Probe Tells Us – Profit & Loss (subscription)
Whilst it is easy to look at events in Brazil and see this as another country seeing the opportunity to boost government coffers at the expense of the bottomless pit they perceive the banks to be, there is something different about the Brazilian FX market.

Holder: Big Penalties Changed Bank Culture – Financial Times (subscription)
Eric Holder, the former US attorney general who oversaw the biggest post-crisis financial investigations in history, said the culture of banks improved during his tenure, as he insisted that prosecutors had been right to level “record-setting penalties” against institutions rather than “trying to make examples of people”.

Swiss Franc Pares Greece-Fuelled Gain That Put SNB Under Pressure –Bloomberg
Switzerland’s franc pared a rally in Asian trading for a second successive Monday as traders monitored the reaction of the nation’s central bank to gains in the currency.

Volumes Heat Up on Exchanges in June – Profit & Loss (free story)
Foreign exchange volumes rose last month according to those platforms to report data with only one indicating a decline in activity. Icap’s EBS says average daily volume (ADV) on EBS was $100.8 billion, a 5% increase on May’s level and a 31% leap from June 2014.

Market Participants Braced for Liquidity Crunch – FX Week (subscription)
Liquidity in foreign exchange continues to deteriorate, leading participants in the market to question its ability to withstand a crisis – and the effect that potential shock moves could have on clients, as risks increasingly sit with them.

Best Forecasters of World’s Worst Currency Predicting More Pain –Bloomberg
Brazil’s real is headed for further declines in the next six months if you believe the currency’s three most accurate forecasters.

Regulatory News

Lawmakers Continue Focus on Dodd-Frank, CFTC and SEC Propose Rules –Capital Thinking Blog
With Senate Banking Committee chairman Richard Shelby’s (R-AL) “resting”, this week the House Financial Services Committee will hold a hearing to evaluate the current status of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act). Later this month, the SBC will hold a hearing on reforming the Financial Stability Oversight Council (FSOC).

Company News

Three Exit Citi – Profit & Loss (free story)
Citi has seen three unrelated departures recently from its FX teams.

Moscow Exchange Promises New Failover Process Following Third Data Glitch in Three Weeks – Inside Market Data (subscription)
The Moscow Exchange has said it will implement new precautions to ensure uninterrupted failover to its backup systems in the event of any service interruption, following the third issue with market data distribution in as many weeks.

BlackRock Expands its Currency-Hedged ETF Suite – Profit & Loss (free story)
BlackRock has added 11 new ETFs to its suite of currency-hedged ETFs, after seeing demand for the products spike in the past year.

Market Savvy  

Euro Holds Up in Face of Greek ‘No’
Reuters
Foreign exchange markets reserved judgement on Greece’s place in the euro and the overall solidity of the common currency project on Monday, prodding the euro less than half a percent lower after Greeks voted ‘No’ to further austerity.

World’s Biggest Currency Trader Likes Euro Shorts Versus Yen
Bloomberg
Citigroup, the world’s biggest currency trader, said it prefers to bet the euro will decline against the yen, rather than against the dollar, as traders seek haven assets amid the turmoil in Greece and China.

Greece: The Next 48 Hours is Critical. Stay Short EURJPY
BNP Paribas
The unexpected “no” vote in the Greek referendum will produce significant uncertainty over the next 48 hours. Merkel and Hollande have confirmed a Summit for Tuesday and Tsipras will likely believe his hand has been strengthened in Greece. Unfortunately, the deal that was on the table last week has expired and the outlook for the Greek economy has deteriorated somewhat due to the capital controls in place over the past week.

Half-Time: Pass Me the Smelling Salts
Olivier Desbarres
Few of the big questions being asked at end-2014 have been answered in a convincing way. I look in turn at where we stand on the Greek saga, the expected US Fed and Bank of England hiking cycles, the near and long-term efficacy of ECB quantitative easing, stress in emerging markets and resilient Asian currencies, and flesh out my expectations for the next six months.

Press Releases

TriOptima Eliminates AUD 2.15 Trillion Notional in First Unlinked LCH.Clearnet SwapClear AUD IRS Compression Cycle
TriOptima announces today that 20 financial institutions have reduced notional principal outstanding by AUD 2.15 trillion ($1.65 trillion) in the first triReduce compression cycle for unlinked, cleared AUD interest rate swaps in LCH.Clearnet’s SwapClear. This cycle reduced dealer-to-dealer AUD interest rate swap notional outstanding at SwapClear by almost 21%.

SGX Market Activities Grow in June
FX futures volume was 303,437 contracts, up from 13,767 contracts a year earlier and up 13% from a month earlier. The most active contract was the INR/USD futures, which had a volume of 286,959 contracts, up from 11,165 contracts a year earlier and 13% higher than a month earlier.

Industry Events