The EUR has held despite this weeks theatrics. Greek restructuring is apparently off the table, for now at least. In translation, the ‘strong advice and preference of the ECB has prevailed’ over Euro politicians grandstanding. There are even some tentative signs in Greece that a compromise is attainable between the government and opposition. However, this does not mean there will be no restructuring later on.

Politicians and policy makers seem to be deluding themselves, systemic risk is real and may eventually be uncontrollable. For now, rather than painting over, they prefer whitewashing the problem.

In the short term, the dollar is expected to suffer from low yields and a dovish Fed, just see how the front end of the US curve is performing. In the background we have the debt ceiling fiasco, yesterday, the House of Representatives voted down measures to raise the debt ceiling. This will be the main reason why the market will keep rates so depressed. The immediate concern will be this Friday’s NFP release. Analysts have already revised down their expectations and expect a weak monthly print, more evidence of slower growth out of the US.

The US$ is weaker in the O/N trading session. Currently, it is lower against 12 of the 16 most actively traded currencies in an ‘orderly’ session.

All round market update.