Greece will be implementing capital controls as suggested by Finance Magnates’ reporters earlier today in the aftermath of the decision by the European Central Bank (ECB) to stop lending new funds to Greek banks.
Early Monday morning quotes from New Zealand are coming in with the EUR/USD trading close to 1.1000, having gapped down less than 200 pips from Friday’s close on the EBS platform to about 1.0970. While the gap is pretty large, it is nothing out of the ordinary, representing a level which is about 1.4% lower than the Friday closing level.
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Brokers are expecting substantial volatility on the forex market in the coming days, however the stress to which currency traders will be subjected may be much less than that of CFDs traders. The German DAX index is likely to gap down between 4 and 5 percent, according to some financial spread betting companies.
While no brokers are already offering liquidity to trade the German index, calls are for an opening price which is lower by about 500 points from the last available level on Friday. CFDs traders may be affected more substantially than FX, since the move is much higher percentage-wise and a number of traders have expected some sort of a deal into the weekend.
The currency market could shrug off the event all together, just like it did in the aftermath of the implementation of Greek capital controls. In fact, the EUR/USD could quickly charge higher, as the market realizes that a big part of this move by the Greek government has already been priced into the market value of the euro.