Greece just step away from a default

Friday, Jun 19 2015

Greece lurched closer to an exit from the euro as a meeting of finance officials to reach a deal over aid dissolved in acrimony, forcing leaders to call for an emergency summit for Monday. “The key emergency is to secure a dialogue with adults in the room,” International Monetary Fund Managing Director Christine Lagarde said after listening to Greek Finance Minister Yanis Varoufakis expound in Luxembourg on Thursday. “What we lack is a dialogue.” Greece and its creditors -- the ECB, the IMF, and the European Commission -- seem further apart than ever after four hours of closed-door talks.

Without a settlement, the ties still binding Greece to the currency bloc may begin to unravel with funding keeping Greek banks afloat under scrutiny. Asked if he could imagine Greece being forced out of the euro, Jeroen Dijsselbloem, the Dutch minister who leads the group of euro-area finance chiefs, said, “The way it goes now we’re going in that direction.” “Let’s say that we do reach an agreement; it’s unthinkable that the implementation and then disbursement will also have to take place before the end of the month,” Dijsselbloem said. “That is simply impossible.”

To get its hands on some money, Greece will now look to extract am extension of its bailout agreement at a June 22 summit that will put Tsipras and Germany’s Angela Merkel, who has tried to smooth out tensions, in the same room. Euro is currently being traded few points above 1.1340 level. Pair is likely to find support around 1.13 handle and resistance above 1.14 area. There will be no major data releases in the rest of the session.

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