Juncker is Talking Junk...Again, Sending Euro Lower

The leader of the euro zone finance ministers Juncker is again triggering heightened anxiety and cutting short the euro's push above $1.4200 for new highs this week.  Juncker is quoted saying that Greece will not make its deficit target this year and more importantly may not get the next tranche of aid from the EU/IMF.  The euro has dropped more than half a cent in response.  

When recognizing that Greece overshot last year's deficit target, it was widely understood that this year's initial target would be surpassed as well, so that is not really news.  Juncker's claim about the next tranche of aid gets to the heart of the matter.  Greece may run out of cash by mid-July and would not be able to service its debt if it does not get that aid.  Yesterday the government approved an accelerated privatization program and more austerity measures--the fifth such austerity program since the crisis began. 

At best this is the brinkmanship like tactics being employed to get greater concessions.  At worst, like in the talk about re-profiling, Juncker may simply be out of step with the real signals and may become more marginalized, if not by fellow officials, by the market.  I expect the EU/IMF to allow Greece to draw down its next tranche of aid because the consequences of not are so severe.