Talking Points:
• Both sides in the Greek negotiations are awaiting the Referendum...and so to will the Euro
• NFPs are top event risk ahead, but not all Dollar-based setups offer the same potential
• Risk trades will have to navigate NFPs, Greece and the weekend liquidity drain
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The final 48 hours of this week will make for difficult trading - despite the upcoming NFPs release and the heavy speculation surrounding Greece. For Euro trades, the Greek focus will likely act as a brake on trend development rather than a catalyst for it. Eurogroup officials this past session stated clearly that they are not going to evaluate and negotiate the situation any further until after Sunday's referendum. It would be highly speculative to take a view on the outcome and the market's interpretation of any development. As such, the effort to build a major position behind such a drive will remain week. For Dollar and risk traders, there is perhaps an assumption that we don't have the same level of constraint on an NFP impact. The labor data however hits the wires on a Thursday because of a market holiday Friday which will drain liquidity. Sustaining a risk run as 'summer trading' conditions kick in ahead of weekend uncertainty will be very difficult. Rousing rate forecasts for the Dollar may be more within our capacity, but that too will be confined by market conditions. We discuss the difficult trading environment ahead in today's Trading Video.
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