The market generates and usually quickly discards rumors. The more plausible, or those that seem to explain market movements, sometimes get picked up by the press, which tends to accelerate the initial move. Today, Reuters reports market chatter that the Greek government has hired a law firm to prepare documents for an eventual exit from the Eurozone and, of course, the Euro. This has bashed the Euro down versus the Dollar, and my shop has seen some sizable buying of Gold since the story made the rounds. In addition, stocks have been edging down.
With a holiday weekend almost upon us, and liquidity thinning out rapidly, I wouldn’t be surprised to to see volatility expand, even if there’s no clarity as to direction. I would also expect Greek and Eurozone officialdom to vociferously deny the rumors. The market’s assumption tends to be that there’s no smoke without a fire.
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