EUR Plummets After Greek Referendum

The first shock waves from Greek voters’ rejection of austerity were felt in the currency markets, with the euro falling against major peers and Australia’s dollar sliding to a six-year low. Analysts are tipping a flight to safety, with Treasuries and German bunds to benefit.

The euro lost 1.1 percent to $1.0992 by 6:12 a.m. Tokyo time, touching its weakest level since June 29. The currency slipped 1.7 percent against the yen and 1 percent versus the pound. The Aussie fell as much as 0.9 percent to 74.52 U.S. cents, the first time it’s broken 75 cents since 2009, as the referendum result dimmed the appeal of higher-yielding assets. New Zealand’s dollar slipped 0.6 percent, even after China stepped up efforts at the weekend to arrest a stock selloff.

With about 90 percent of the ballots counted, Greeks have voted 61 percent against austerity measures required to win another bailout package, according to figures posted on the Interior Ministry’s website. The results mean Greece exiting the currency union is now the base-case scenario, JPMorgan Chase & Co. said. China suspended initial public offerings and brokerages pledged to buy shares in weekend measures aimed at halting the steepest plunge in local equities since 1992.

“A ‘no’ vote represents a sizable pothole in the road to resolution for Greece,” Frances Hudson, a global thematic strategist at Standard Life Investments in Edinburgh, which oversees $383 billion, said by e-mail. “Because opinion polls had shown a narrowing of the two sides and markets seemed to have priced in a ‘yes’ vote, the decisive nature of the vote will probably see a sharp risk-off reaction.”


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Dean Popplewell

Dean Popplewell

Vice-President of Market Analysis at MarketPulse
Dean Popplewell has nearly two decades of experience trading currencies and fixed income instruments. He has a deep understanding of market fundamentals and the impact of global events on capital markets. He is respected among professional traders for his skilled analysis and career history as global head of trading for firms such as Scotia Capital and BMO Nesbitt Burns. Since joining OANDA in 2006, Dean has played an instrumental role in driving awareness of the forex market as an emerging asset class for retail investors, as well as providing expert counsel to a number of internal teams on how to best serve clients and industry stakeholders.
Dean Popplewell