All the bluff and counter-bluff over the last week on whether the Greeks will implement the austerity program’s being imposed on them by their Northern European overlords accomplishes one thing. It limits whatever relief rally that would have accompanied a garden variety bailout in which Greece quietly vowed to do its best while keeping its fingers crossed behind its back.
The game is very much out in the open, so all we are accomplishing, if we get a deal done, is a chaotic default over the next month. We’re not solving the problem in a durable way, and everyone knows it.
Hard to see much of a rally on a deal under those circumstances. 1.3245 may prove to be a near-term top. Earlier I though we could see a run to 1.34/1.35 on a relief rally…