Euro Tumbles as Greece Roils Markets

 
Snapshot: 

        -EUR/USD 1.1114-17; 10-year Treasury yield at 2.35%; U.S. stock futures lower; Brent crude at $62.27; gold higher
        -Watch for: Pending home sales index; Texas manufacturing outlook
        News: Greece Orders Banks Closed, Imposes Capital Controls to Stem Deposit Flight; Spain Finance Minister: Tuesday's Deadline for Greece is Key; U.S. Panel Aims to Shield Planes From Cyberattack;
        The euro tumbled to more than a three-week low against the U.S. dollar Monday as Greece continues to roil markets. The common currency was down 0.7% at $1.1089 on the day early in Europe, according to FactSet.
        Greece has ordered banks to stay closed for six days starting Monday. Strategists at Rabobank said that "the market is likely to judge the weekend's developments as taking Greece a step closer to euro exit, which, in turn, is likely to prompt a sizable bout of risk aversion."
        On Sunday, the Greek parliament approved a referendum for July 5 on whether to accept austerity measures demanded by the country's creditors in exchange for further aid.
        That came after eurozone finance ministers in Brussels on Saturday rejected a Greek request for a one-month extension to its bailout.
        Greece now looks set to default on its $1.73 billion payment to the International Monetary Fund on Tuesday.
        "With a default now firmly on the cards, markets everywhere face a very testing start to the week," said Ian Williams, economist and strategist at brokerage Peel Hunt.
        In early Asian trade, the euro briefly sank to a one-month low of ?133.76. Against the U.S. dollar, it fell to as low as $1.0950 compared with $1.1205 in New York Friday.
        When global turmoil erupts, the yen typically rises as it is seen as a safe-haven currency.
        U.S. Treasurys rallied, along with other core eurozone bonds, after Greece calls for a referendum and closes its banks. The yield on the 10-yr UST was trading at 2.35%, from around 2.40% at the end of the last week, after having touched an intra-day low of 2.30%. US Treasury futures trade just over 1 point higher at 126-035.
        In European bond markets, the yield on the 10-year Italian benchmark bond rose 0.19 percentage point to 2.32%, while the yield on the 10-year Spanish bond also rose 0.19 percentage point to 2.27%.
        In very thin trade, Greek two-year bond yields soared more than 12 percentage points to close to 33%. Yields rise as bond prices fall.
        Futures for U.S. stock indexes remained sharply lower ahead of Wall Street's open on Monday, with markets facing the likelihood that Greece could default on its debt after the European Central Bank capped the level of much-needed emergency funding for Greece's banking system.
        Ahead, there is little data of note on Monday, with ADP employment and manufacturing ISM Wednesday and the labour market report Thursday of particular interest later in the week, which is a shorter due to the Independence Day holiday Friday.
        In Europe, stocks slumped after a turbulent weekend for Greece's debt crisis that put the country closer to an exit from the euro.
        The pan-European Stoxx Europe 600 fell 2.3% in early trade. Greece's stock market will be closed for as long as banks aren't open to the public, the country's Capital Markets Commission said.
        Asian markets were roiled, as China's stocks closed in bear-market territory.
        A move by China's central bank over the weekend to cut interest rates failed to give a sustained lift to China's main stock market, which has fallen 21.5% from a high on June 12, crossing the 20% threshold that defines a bear market. Stocks have been under pressure over the past two weeks after a yearlong debt-fueled rally.
        The Shanghai Composite Index closed down 3.3% after rising more than 2% at the open, while the smaller Shenzhen market ended down 6.1%.
        In Hong Kong, the Hang Seng Index fell 2.6%, its biggest one-day loss in more than a year.
        Oil prices tumbled along with other financial markets, as the escalating Greek crisis hit confidence. Brent, the global benchmark, was down 1.6% to $62.27 while U.S. crude was down 1.7% at $58.64. The stronger dollar was weighing on oil which is priced in dollars and becomes more expensive for holders of other currencies when the greenback appreciates. There are also fears that a possible contagion from Greece will hurt European oil demand as most of the European oil demand growth this year is coming from the southern countries of Europe.
        Gold prices were higher on the London spot market. Spot gold was up 0.5% at $1,181 a troy ounce after hitting a four-day high earlier in the session at $1,188.07 an ounce.
        "Gold rallied $10. However, it remains within the same tight range between $1,170 an ounce and $1,200 an ounce," said Nour Al-Hammoury at Abu Dhabi-based ADS Securities.
        Greece Orders Banks Closed, Imposes Capital Controls to Stem Deposit Flight
        Greece shut down its banking system, ordering lenders to stay closed for six days starting Monday, and its central bank moved to impose controls to prevent money from flooding out of the country.
        Spain Finance Minister: Tuesday's Deadline for Greece is Key
        Spain's finance minister, Luis de Guindos, said Monday that the expiry of the current Greek bailout on Tuesday is the key deadline for the current impasse between Athens and its creditors, as conditions would be very difficult for the two sides to agree on a third bailout later.
        U.S. Panel Aims to Shield Planes From Cyberattack
        U.S. aviation regulators and industry officials have begun developing comprehensive cybersecurity protections for aircraft, seeking to cover everything from the largest commercial jetliners to small private planes.
        Zarif Returns to Iran for Nuclear Deal Consultations
        Iranian Foreign Minister Javad Zarif headed back to Tehran for potentially critical consultations as a senior U.S. official said all sides now expect nuclear talks to go past the June 30 deadline.
        Write to Sarka Halas at sarka.halas@wsj.com
        (END) Dow Jones Newswires

        June 29, 2015 06:21 ET (10:21 GMT)

#FX
#Forex
#SaleForex
#EuroTumbles
#GreeceRoilsMarkets