It could happen
Accidents will happen sang Elvis Costello in 1979, and after the imposition of capital controls last night on Greece's banks, the very real fear that the Greek government's high-risk, eggs-in-one-basket strategy on its debt crisis could lead to an outcome absolutely no-one wants is becoming more probable with each passing day.
Prime minister Alexis Tsipras may feel like he's the man after calling Brussel's bluff and announcing plans for a referendum on the euro for July 5, but for ordinary Greeks, the subsequent straitjacketing of their banking system has left them unable to take out more than €60/day.
Will a Grexit happen? Respected commentators have put it as high as an 85% chance, but Saxo Bank's head of forex John J Hardy thinks that is premature.
"There's a major geopolitical factor at play here," he says. "The US will definitely be trying to avoid any scenario that allows Russia to have any wedge in Greece."
Inevitably, that has seen money run for cover with bunds, gold and the yen all hoovering up the nervous cash as part of an "extreme flight to quality," says the Singapore desk's Christoffer Moltke-Leth on the back of risk-off permeating markets.
German bunds were up 300 ticks immediately after markets opened although this dramatic spike gave way quickly to leave them up just over 200 ticks just before 0700 GMT. Bund yields were in to around the 0.7% mark.
Peripheral bonds might have been expected to take a hit, but were able to "stage a decent comeback," says Michael Boye from the fixed income desk. "Any further verbal commitment that they will expand the programme to Greece will mean that this could reverse quite quickly."
German bunds have opened strongly on risk-off sentiment. Photo: iStock
Will that happen? The ELA emergency liquidity assistance expires tomorrow and Greece's banks have nowhere to turn. "If the
European Central Bank suspends it altogether, the Greek banks will effectively be insolvent immediately," Boye says.
Focus will now turn to the July 5 referendum with support for remaining in the European Union strong.
"The market is already pricing in the fact that the 'Yes' vote seems the most probable," says Boye. "Any indications of a 'No' outcome could see things turn very messy."
"For now, it looks like reaction has been capped and contagion risk has been contained."
Arise Sir Yen
The yen has not surprisingly been a major beneficiary overnight rising across the board and, in particular, against the euro.
"JPY is the preferred safe-haven at the moment," says Hardy from the Copenhagen desk. 
The euro is getting caned against the yen as the latter
revels in its safe-haven status. Source: Saxo Bank
USDJPY was also on the way down to around the 122.00 area during the Asia session.
"We'll have to watch this very carefully as this approaches key support," says Hardy.
USDJPY was at 122.86 at 0655 GMT.
As for EURUSD, the former has held up rather well after threatening to implode overnight with a plunge to 1.0960 during the Asia session. A recovery thereafter brought back above 1.1000 and even briefly above 1.1100.
"EURUSD resistance to the upside is at 1.1130 and to the downside at 1.1000 and if we close below this, it would usher in a fall," says Hardy. "The fact it is only 50 basis points down on Friday's lows is something but this probably factors in that Greek support to stay in the Eurozone is quite high and this is a positive."
EURUSD was at 1.1077 at 0655 GMT.
Gold's shining
Gold has its lustre back rising against the dollar and particularly against the euro shooting up towards the €1,073.06/oz area during the Asian session.
"Gold has attracted a lot of safe-haven demand especially against the euro," says Saxo Bank's head of commodities, Ole Hansen.
""We need to see further deterioration in this situation for markets to catch further bids."
Gold is on the tear against a beleaguered euro. Source: Bloomberg
The precious metal has also been rising against the dollar to the $1,180/oz area but further moves could be capped at $1,190/oz, says Hansen.
XAUUSD was at $1,182.12/oz at 0655 GMT.
Iran deal
In oil markets, eyes are less on the Greek deadline and more on another deadline tomorrow — the impending agreement on Iranian oil that could unleash something like 1 million barrels/day of oil onto oil markets if the Iranians can get the deal over the line.
"The Iran deal is close," says Hansen. "That could have a big impact on the market and we could see WTI down to the $55/b mark."
WTI crude was at $58.70/b at 0655 GMT.
And finally...
This could, perhaps should, and on any other day would have headlined, but amid all the Greek fallout, we're losing sight of a real crisis developing in China too.
The Shanghai Composite Index has been in a two-week plunge that has wiped out a considerable sum of those massive year-to-date gains and the index followed Black Friday's fall with another stunning 7% fall during the Asia session.
China may have moved to cut interest rates by 25 basis points simultaneous to a 50 bp cut to RRR for the first time since 2008, but the markets showed no sign of pulling out of this aggressive slide despite, the "clear indication that the Chinese want to support growth," says Moltke-Leth.