Greek election on Sunday is the focus of attention

The Greek election over the weekend looms large over the money markets. Greek election on Sunday is the focus of attentionThere is a genuine feeling of unease over what will happen to Greece over the coming months.

But as ever with the money markets, uncertainty over the outcome is the main driver rather than the prospect of a Greek exit from the eurozone.

The water was muddied further by an article in the FT by Alexis Tsipras, leader of the Syriza Party, suggesting he would keep Greece in the eurozone if elected.

A month ago the dominant thought was that if an anti-austerity party formed a government, Greece would then start along the road to leaving the euro.

However, it is possible that Greece could remain inside the eurozone even if they were to default.

Whatever happens on Sunday, next week will likely be an interesting one.

Across the major pairs the euro has gaining ground in Asian trading overnight as details leaked (what a surprise….) that European leaders are prepared to discuss a European banking union at the next EU summit.

It strikes us as yet another game of chicken between EU politicians and the money markets.

Let’s hope they can actually deliver what is needed this time, rather than just proposing something and then thinking it wouldn’t matter if they yet again fail to deliver.

The Swiss Central Bank held interest rates this morning and also reaffirmed it will defend the 1.20 level against the euro.

If Greece were to leave the SNB’s resolve would be tested to the max as people dumped euros and piled into the Swiss Franc. Although the SNB suggest that they will buy euros in unlimited quantities, would that work in practise?

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