Markets will once again be on euro watch this week. After the dollar’s strongest weekly performance of the year and the euro/dollar’s weakest, and a big drop in the DAX and CAC, all eyes will be watching to see if Greece’s announcement of additional fiscal measures can turn global risk aversion.
We doubt it, unless the shorts and nervous under weights really panic and scramble to square up positions. The melanoma has spread from a skin sore in Southern Europe into the vital organs of the core’s financial system. Too much uncertainty, lack of leadership, potential big tail risks, funding problems in the European financial sector are enough of a toxic brew to keep global markets on edge and likely to probe recent lows, in our opinion. Time to tighten the seat belts.