Schulz fuels fears for a Grexit

In May EUR-USD ranged between 1.0819 and 1.1468 (according to EBS). At the current level of 1.1216 the exchange rate remains in the upper end of this range - despite the fact that the risk of a Grexit has no doubt risen. The factor model suggests that the EUR-USD move seen since the end of May is also the result of EUR strength and not just USD weakness, accroding to Commerzbank. 

Not even the higher-frequency moves do not point towards what Schulz is suggesting. Even clearly negative news, such as the IMF withdrawing from the negotiations last week, did not have a notable effect on the EUR exchange rates at all. The reasoning of all those who argue for unlimited support for Greece with the allegedly horrible consequences of a Grexit for the financial markets are weak, says analysts. 

The scare mongering that has now started is likely to create sufficient nervousness on the market (that in its current structure is likely to create less stable liquidity than was the case in the past) to result in higher volatility in the EUR exchange rates on its own, added Commerzbank. Moreover, rising EUR-USD volatility is a long term phenomenon.