Souvlaki for everyone, Greece is saved! Oh wait...

Seems the world has survived yet another Greek election and unsurprisingly reacted accordingly on the Asian open last night. All risk pairs gapping higher and the USD sold in droves. The natural reaction/question this morning is whether or not this will be another Spailout rally fader or smalls deeper with the FOMC event risk still ahead of us this week. The wait and see approach is the most prevalent in the market at the moment and this in itself is adding to the thin conditions we’re witnessing across FX at the moment.

The market opens this morning in Europe to flashing red signs of Spanish Tapas (10yr yields) hitting all time Euro zone era highs, printing above the 7.1% level and Italy playing a small round of catch up on their own longer term paper. This is understandably adding fuel to a rather confusing fire as obviously nothing has been solved and likely won’t be for a time yet. Order books remain thin as tail end risk has been significantly reduced ahead of the weekend and positioning remains light and somewhat mixed. No one in any great conviction has a particular trade on right now and stop hunting for last minute longs/shorts will be driving directionality today. Net/net I’m looking for a ranging market until such time as the head scratching ceases and real money decides to get fervently involved once again.

Having said all of that as I type fresh lows are being printed in EURUSD, AUDUSD etc. But I just can’t bring myself to believe that this is the real fade of enthusiasm and some part of me believes this is just a small washout... Time will clearly tell.

Below is an excerpt from JP Morgan regarding the composition of the Greek election results and net/net, the result is almost identical to the one achieved on May 6 at last attempt, with the obvious result that they couldn’t form a cohesive government/coalition then, so.... what makes us think that this time will be different...

So where does your scribe stand on all of this? Well in actual fact, he sits, scratching his head and wondering better the devil you know, or better the gut you trust. I lean on the latter and wait for Ben to disappoint on Wednesday before getting truly involved once again.

Helmets on for a slow whippy day folks.

Good luck.

With 99.8% of the vote counted in the Greek parliamentary elections, the results are as follows: ND 29.7% (129 seats out of 300 seats in parliament), Syriza 26.9% (71 seats), Pasok 12.3% (33 seats), Independent Greeks 7.5% (20 seats), Golden Dawn 6.9% (18 seats), Democratic Left 6.3% (17 seats), Communists 4.5% (12 seats). Given the parliamentary arithmetic, ND and Pasok could establish a working majority with 162 seats. Adding their closest ideological partner the Democratic Left would raise their seat count to 179. The snag is that these same three parties could have formed a government on May 7 and chose not to. As well, Pasok has been insisting since the May elections that Syriza should be part of any coalition, an overture which Syriza of course rejects because it views ND and Pasok as troika lackeys. So either (1) Pasok needs to consent to a coalition without Syriza; (2) Syriza needs to consent to a coalition with traditional parties (recall that no party wanted)