EUR
Greek banks and the stock exchange will be shut for at least a week after
creditors refused to extend the country’s bailout and savers queued to withdraw
cash, taking Athens’ stand-off with the European Union and the International
Monetary Fund to a dangerous new level. Greece’s banks have been kept
afloat by emergency funding from the European Central Bank and are on the
front line as Athens moves towards defaulting on a 1.6 billion euros payment

EUR
Greek banks and the stock exchange will be shut for at least a week after
creditors refused to extend the country’s bailout and savers queued to withdraw
cash, taking Athens’ stand-off with the European Union and the International
Monetary Fund to a dangerous new level. Greece’s banks have been kept
afloat by emergency funding from the European Central Bank and are on the
front line as Athens moves towards defaulting on a 1.6 billion euros payment
due to the International Monetary Fund on Tuesday.

The ECB had made it difficult for the banks to open on Monday because it
decided to freeze the level of funding support it gives the banking system,
rather than increasing it to cover a rise in withdrawals from worried
depositors.

Amid the drama in Greece where a clear majority of people want to
remain inside the euro.The next few days present a major challenge to the
integrity of the euro zone currency bloc. The consequences for markets and
the wider financial system are unclear.

Greece’s left-wing Syriza government had for months been negotiating a deal to
release funding in time for its IMF payment. Then suddenly, in the early hours
of Saturday, Tspiras asked for extra time to enable Greeks to vote in a
referendum on the terms of the deal. Creditors turned down this request,
leaving little option for Greece but to default, piling further pressure on the
country’s banking system.

The creditors want Greece to cut pensions and raise taxes in ways that Tsipras
has long argued would deepen one of the worst economic crises of modern times
in a country where a quarter of the workforce is already unemployed. Many
leading economists have voiced sympathy with the Greek government’s argument
that further cuts in spending risk choking off the growth which would give
Greece some prospect of servicing debts worth nearly twice its annual national
income.

On Sunday the ECB stated it would hold the funding line at the same level as
Friday, despite the deposit outflows estimated to be €500mio. The central bank
said it was monitoring the situation and stood ready “to reconsider its
decision.” The 18 other countries sharing the euro countries have
blamed Greece for breaking off negotiations and pledged to do whatever it takes
to stabilize the common currency area.

International Monetary Fund boss Christine Lagarde said that if the July 5 vote
produced “a resounding yes” to remain in the euro and fix the Greek
economy then the creditors would be willing to make an effort.

We expect there to be a massive amount of volatility in the Euro  this
week due to the uncertainty surrounding the predicament in Greece. 

Key
Announcements
13:00 – EUR – German inflation (CPI) June expected to be lower form
0.5% from 0.7%