This week could really become an interesting one.

There is the Federal Open Market Committee (FOMC) meeting that concludes on Wednesday. We should get insight into the summary of the economic projections that should give us a better view on the Fed's expectations on future fed funds rates.

All information about how the Fed sees inflation, the dollar, the economy, employment and so on, should finally come during Fed Chair Janet Yellen's press conference.

It will be interesting to see if the statement will again have gotten a unanimous vote, as has been the case for the last three FOMC meetings.

In the meantime, current market expectations about the forward path of the fed funds rates has eased significantly. When we look at Morgan Stanley’s expectations (median) they expect Fed fund rates to be close to, but below 2.50 percent in 2017
 
By the way, recent softer expectations on future fed funds rates has been one of the reasons for a “softer” dollar.

It also could become interesting how the Fed conciliates their preferred measure of future inflation, which uses the 5x5 Treasury Inflation-Protected Securities (TIPS) breakeven calculation, but that results in more than 1 percent lower expected inflation rate than the University of Michigan Inflation Expectations.
 
Anyway, let’s hope we get a little bit wiser on Wednesday, which is of course not a sure thing.

That said, there is still that Greek Rubik’s Cube.

After the latest debt talks between Greece and the EU collapsed over the weekend, on Monday we already saw Greece's 2-year yields jumping to 28.3 percent because of rising default risk.

What probable didn’t catch the attention of many investors is late Sunday when we saw the euro declining suddenly about 0.6 percent against the dollar.

As always, numbers at face value don’t tell the whole story. So, when we look at the one-month implied volatility, which measures expected currency swings over the coming month, this sudden upward move of about 5 percent to 14.4125, which, to put it in context, is way above the 4.000 zone where it was in July-August of 2014, represents a blinking red light.

The most important aspect of the whole move is the fact the euro/dollar one-month implied volatility is back to where it was in December 2011, when things were really bad.

Yes, technical warnings about GREXIDENT are on the rise, but, interestingly, still no signs of real worries yet. I personally wouldn’t be that complacent, but in the end it’s anybody’s choice.

Now, what really worries me was over the weekend Germany's vice-chancellor and economy minister, stated in the German mass circulation tabloid Bild: “… We will not permit being blackmailed by Greece. We will not allow the German workers and their families paying for the exaggerated campaign promises of an in part communist government …”

To me, this says enough about the damage that is already done to Greece and the EU as a whole, and the mess they are all in.

As for how the euro would perform should Greece exit, the jury still remains out. Watch out if we see the core against periphery bond yields widening once again because that would signal high volatility for the euro.

From my side, I still expect to euro to weaken further, which in fact would be in some way in accordance, but not for the same reasons, to German Chancellor Angela Merkel’s view who warned last week that a too strong euro made it difficult for countries to carry out much needed reforms. It’s clear she didn’t aim at Germany.

All by all, and maybe a good portfolio position these days could well be: “better safe than sorry.”