Posts belonging to Category Greece



UK inflation report and Central Banks’ speeches in focus

With the US markets being closed due to the bank holiday yesterday, volatility was fairly subdued for the Greenback.

With the US markets being closed due to the bank holiday yesterday, volatility was fairly subdued for the Greenback.

Though the US dollar has opened with some strength this morning as traders realign positions.

With Janet Yellen, in her testimony, taking a hawkish tone on the position of the Federal Reserve as an independent body, signals for the market continue to forecast a US interest rate hike in the near future, possibly March. Analysts also forecast the Greenback to be fairly strong right through 2017, basing their predictions on expected tax, fiscal and monetary policy changes.

News from Europe

EURUSD traded above the 1.06 mark yesterday though gains have been pulled back as the Euro takes a defensive approach as the French Election draws near. A poll showing the rising popularity of France’s right wing candidate, Marine Le Pen tested investorsí nerves as they moved into French Bonds leading the stock markets to falter.

Also, Greece needs a new bailout tranche by the third quarter of the year to repay the IMF and has asked for more time to negotiate an agreement on the austerity measures, as Greece has rejected the proposal to reform pensions. On the economic calendar from the Eurozone, French inflation, manufacturing and services data are due to be released, while the US calendar is made up of speeches by Fed Members Kashkari, Harker and Williams, coupled with Redbook numbers and manufacturing and services PMI data for further direction.

Sterling enjoys minimal gains

Sterling meanwhile did enjoy some gains against the Greenback amidst low volatility yesterday but the lack of confidence in the pound is very evident as it failed to consolidate any of those gains as US markets reopened. However, despite reports that consumer confidence is still rising after the Brexit vote and that the demand for British goods has risen to a two-year high the pound has barely managed to crawl out of the 1.25 level against the Greenback after last week’s negative UK retail sales data.

With most of the movement for Sterling dependent on the Article 50 trigger and negotiations on a Brexit deal, focus for the short term will be on Bank of England Governor, Mark Carney’s speech and the inflation report due out today as well as the public sector net borrowing numbers for January for further direction.

European Commission projects expansion for UK

The European Commission has projected an expansion of 1.5% for the UK after initially suggesting just a 1% growth, seemingly backing the pound for 2017.

The European Commission has projected an expansion of 1.5% for the UK after initially suggesting just a 1% growth, seemingly backing the pound for 2017.

 

After initial fears of Brexit causing harm to growth in the UK, they have appeared to have back tracked and now state ‘growth has yet to be affected’. 2016 ended up being positive in terms of expansion, showing that the UK was the fastest growing G7 nation. But expectations have been kept at a steady 1.2% growth for 2018. Key data out in the UK today, with Consumer Price Index expected to come in just shy of 2%, with previous figures moving to 1.6%. Consumers are slowly beginning to feel the force of inflation, which has slowly been on the rise since Q4 of 2016.

The Greek banking situation has made its way back into the press, as bailout issues arise again. The BoG Governor, Mr Stournaras has stated that Greece requires another urgent bailout. With the Greeks beating its fiscal target set by IMF officials, it would appear they could be in line for a quick fix, but would need to keep to the agreement set out previously.

Marine Le Pen likely to win first round of voting

In other news, Marine Le Pen is likely to win the first round of voting in France and she has not been shy in stating she wants France out of the EU, now commonly known as a potential ‘Frexit’. All eyes will be on the how the National Front party performs in the upcoming elections.

Focus on German GDP

Today the market will be focussing on German Gross Domestic Product (1.7% expected against 1.8% forecast) & Consumer Price Index (1.9% expected & forecast) plus Italian Gross Domestic Product (1% expected against 1% forecast) in the spotlight.

All eyes on Donald Trump

All eyes will be on Donald Trump over the next few weeks, after he stated he will be making a big announcement with regards to tax. The announcement had moved US indexes up suddenly, as investors await the breaking news. The end of the day sees Federal Reserve’s Janet Yellen speaking before a Senate Banking Panel, which could feed into market movements.

Trump tax plans excite markets

President Trump yesterday managed to excite financial markets as he announced ‘something phenomenal’ on taxes in the next two or three weeks in a meeting with US airline executives.

President Trump yesterday managed to excite financial markets as he announced ‘something phenomenal’ on taxes in in the next two or three weeks in a meeting with US airline executives.

During a press briefing later on in the day with the White House Press Secretary, Sean Spicer confirmed the package will be ‘comprehensive’ and that it will ‘address both the business side of the tax ledger as well as the individual rates’. Trump also confirmed that he is working on seeking to roll back ‘burdensome regulations’ and change the country’s ‘obsolete’ infrastructure system.

Today President Trump will meet with Japan PM Abe in Washington so the news will likely be dominated again by Trump with markets focused on the specifics that will come out of the meeting. It will be interesting to see this play out as Trump recently commented on Japan manipulating its currency to gain competitive advantage and also accusations of Japan conducting unfair business practices. Today’s meeting will be more about two-way trade and focus on a full range of economic ties with Abe planning to discuss creating jobs and building infrastructure in the US.

Wise Money market news

In Europe, Greece has once again come to the attention of the news as debt problems are again spooking markets in a year that is already proving challenging for Europe. The IMF and EU are in focus at the moment as they seem to disagree on how to tackle Greeceís debt problems. Yesterday the IMF said that in their view Greece should target a primary surplus target of 1.5% accompanied by significant debt relief which is in stark contrasts to what the EU has been pushing for: no debt relief, more austerity and a primary surplus target of 3.5%.

Data to come

On the data front, yesterday in the US there was no change to the final wholesale inventories print of +1.0% mom in December, while initial jobless claims surprisingly fell 12k last week to 234k. In Europe, Germany December trade surplus was narrower than expected Ä18.7bn (vs. Ä20.5bn expected), which reflects a decline in exports while imports remained flat during the month.

Markets flat on Wednesday

Wise Money markets were rather flat on Wednesday, with stocks stuck in their recent range.

Wise Money markets were rather flat on Wednesday, with stocks stuck in their recent range.

Although the dollar reversed early gains after coming under pressure from a decline in U.S. The soft Treasury yields released had investors pricing out a March rate hike by the Fed amidst the uncertainty over Donald Trump’s economic policies. Most of the interest yesterday was in Gold, which continued its recent gains and made a new 3 month high as many investors deem it to be a safe haven. Furthermore, Investors in the market are concerned by the wave of elections coming up in Europe, not least in France where the far-right candidate Marine Le Pen is gaining mounting support as she promises a referendum on EU membership.

Euro under pressure

The euro is coming under pressure in the markets due to a cocktail of perceived headwinds. The French political situation has become more uncertain and we also have renewed concern over Greece alongside problems in the Italian banking sector. European central Bank President Mario Draghi speaking yesterday attempted to reassure the markets and outlined that he sees the ECB maintaining an accommodative monetary policy until his term concludes in 2019. This helped to restore some confidence but scrutiny will be high on developments within Europe.

Light day in terms of data

Today we have a light day in terms of data with US initial claims the only data of note. Jobless claims have fallen recently and today the feedback is expected to show that claims remain at low levels. Tonight, we have Bank of England governor Mark Carney speaking and this could lead to some volatility in the pound.

Global stock markets slide on Greece debt crisis

Stock markets in Britain, Europe and the US have fallen after Greece closed its banks and imposed capital controls.

Stock markets in Britain, Europe and the US have fallen after Greece closed its banks and imposed capital controlsThe moves by the Greek authorities came after the European Central Bank decided not to extend any extra emergency funding.

London’s FTSE 100 index was down 1.47% and Germany’s Dax index fell more than 2%. In the US, the Dow Jones fell nearly 1% early in the session.

Bank stocks are among the hardest hit, with shares of Deutsche Bank and Commerzbank both losing more than 4%.

The Athens Stock Exchange and Greek banks will be closed all week.

On the money markets, the euro lost ground against other major global currencies.

The London FTSE 100 share index was down 98.47 points at 6,655.23 with other European markets seeing even bigger falls. Earlier in Asia, Japan’s Nikkei index fell nearly 3%.

On the currency markets, the euro saw volatile trading in Asia, falling by 2% at one point. However, it has since recovered some ground, with the euro down 0.15% against the dollar at $1.1149.

The euro has weakened against the pound, with one euro now worth £0.7089, while the pound buys €1.4108.

Oil prices are heading lower. Brent crude oil futures fell more than 1.5% to $62.10 a barrel.

Bond yields (an indication of borrowing costs) for Italy, Spain and Portugal – which are considered some of the weaker eurozone economies – rose sharply.

In contrast, German bond yields fell. German bonds are seen as safer investments in times of crisis.

Greece was due to make a €1.6bn payment to the IMF on Tuesday – the same day that its current bailout expires.

Last week, talks between Greece and the eurozone countries over bailout terms ended without an agreement, and Prime Minister Alexis Tsipras then called for a referendum on the issue to be held on 5 July.

At the weekend, the Greek government confirmed that banks would be closed all week, and imposed capital controls, limiting bank withdrawals to €60 (£42) a day.

There is zero chance of the European Central Bank turning Emergency Liquidity Assistance back on – life-saving lending to banks – unless Greeks give an affirmative vote to a bailout proposal from the rest of the eurozone and the IMF, which Juncker sees as a proxy for Greece’s monetary future.

As for Athens, most of the Syriza government detests the bailout offer – for the way it pushes up VAT and cuts pensions.

So we will have the bizarre spectacle of a Prime Minister, Alexis Tsipras, arguing both against the bailout and for remaining inside the eurozone – so goodness only knows how he will vote.

And Greek people will be torn between fear and loathing of bailout proposals that will damage the living standards of many of them, and fear and loathing of abandoning the euro and seeing their banks closed.

Greek worries wise money markets

European stock markets have fallen sharply as senior EU officials have discussed a possible Greek default for the first time.

European stock markets have fallen sharply as senior EU officials have discussed a possible Greek defaultThe Athens stock exchange closed nearly 6% lower, while Germany’s Dax and France’s Cac 40 closed more than 1% lower.

Stocks in the National Bank of Greece fell by more than 10%, while Piraeus Bank fell more than 11.5%.

According to official sources quoted by news agencies, senior eurozone officials meeting in Bratislava on Thursday held their first formal talks on the possibility that Greece might default on its debt payments.

Also on Thursday, officials from the International Monetary Fund (IMF) pulled out of talks with Greek politicians in Brussels, citing “major differences”.

Greece is seeking to avoid defaulting on a €1.5 billion debt repayment to the IMF by the end of June.

Shares on the Athens Stock Exchange had soared on Thursday amid renewed optimism about Greece’s talks with its creditors.

The index climbed more than 14% – the best performance in several weeks, but the IMF’s withdrawal has dampened investors’ moods.

On Friday, Jeroen Dijsselbloem, president of the Eurogroup of finance ministers, said a deal without the IMF was “unimaginable”.

However, German Chancellor Angela Merkel urged all parties to continue negotiations.

Speaking at a business conference in Berlin, Ms Merkel said: “Where there’s a will there’s a way, but the will has to come from all sides, so it’s important that we keep speaking with each other.”

In London shares continued their downward slide as fears over Greece’s ability to negotiate a settlement with European creditors dented sentiment.

At the close, the benchmark FTSE 100 index was down 61.82 points, or 0.9%, at 6,784.92.

The top riser was Royal Mail, up 2.78%, recouping some of Thursday’s losses.

The postal services company had fallen 4.5% on news that the government had sold 15% of its remaining 30% stake in the company, raising £750m.

The biggest faller on the 100-share index was Johnson Matthey, down 3.1%. On the FTSE 250, platinum producer Lonmin fell 7.1%, compounding earlier losses in the week, after mining and commodity firm Glencore distributed its 23.9% stake in the company to investors.

On the currency markets, the Pound was up 0.41% against the Dollar at $1.5581 and up 0.25% against the euro at €1.3818.

Positive Greek bond buyback compounds German economic sentiment

Wise Money Markets in Europe have gained momentum and surged to an 18 month high following the German ZEW economic investor confidence figures released yesterday which showed a jump in December way above market expectations.Positive Greek bond buyback compounds German economic sentimentThe cause was supported in the Eurozone by renewed optimism that Greece has been successful in drawing enough bonds to its sovereign debt buyback to ensure further aid requirements are unlocked by the IMF and EU.

Although the bids attracted €31.8 billion, the price paid for the bonds were higher than expected, meaning the reduction will fall short of expectations.

Consequently, this means that the debt to GDP ratio will be reduced to 126.6% in 2020, contrary to the forecast of 120%-  the currency has raced up to 1.30 levels against the US Dollar.

This positive sentiment in the Eurozone led Spanish borrowing costs to fall, however there are still concerns over the political instability in Italy, which did not seem to stop the surge in the single unit currency.

Over to the US, markets are still trading with cautious fervour as speculation continues to mount that the US Federal Reserve will add to its monthly bond purchases with further QE which also led the currency to weaken.

We still await the results of the 2 day Fed meeting that begins today to hear further details, where they will announce $45 bn of Treasury bond buying.

Though the economy seems to be gradually improving, the Fed continues to add stimulus but may be faced with higher inflation and a weaker dollar in the near future.

The US fiscal cliff talks are also still being discussed as they try and reach an agreement as to the measures taken to reduce their debt, set to come into force in January.

Positive sentiment from the Eurozone coupled with speculation of QE in the US, led Sterling to strengthen against the Greenback as we breached the 1.61 level.

We also expect unemployment figures from the UK later this morning, expected at 7.8%. Any figure that comes out higher than this could lead to a bit of weakness in the pound.

Greece deal a damp squib for the euro

Money markets across the globe saw a somewhat subdued surge overnight, despite the Greece deal having been passed which was offset by concerns over the fast approaching US Fiscal Cliff decisions to be made.
Greece deal a damp squib for the euroWhile most people expected the euro to gain some strength once the bailout deal had been approved, investors remained cautious and the currency failed to break the 1.30 barrier against the greenback as concerns grow on whether the deal will actually help Greece reduce its GDP target from 144% to 120% over the next 8 years or will it force Greece to remain locked in the Eurozone facing further stark austerity measures and low growth.

The first loan instalment of 34.4 billion will be disbursed this December.

Even though the Greek PM Antonio Samaras has issued a statement that it is a reforming move for Greece, most markets are still sceptical whether Greece actually has the tools and the discipline to ensure that further requirements are met.

For now, the only bit of good news for the Eurozone is that they have managed to keep the country as part of the union.

The build up over the meeting saw the euro move to a high of 1.30 against the dollar, but quickly started losing its initial gains and ended up at 1.2930 levels.

Also, the European Stability Mechanism (ESM), a fund setup to help struggling economies, has been approved by the European Court paving the way for other nations like Spain to request aid.

We had unemployment figures from France, which showed that it hit a 14 year high in November increasing unemployment numbers in the country by 45400 bringing the total to 3.1 million people out of work.

We also had a US consumer confidence figure yesterday, the results of which showed that the US economic sentiment has moved to a 4 year high at 73.7 in November.

The currency enjoyed some strength as the Core Durable goods numbers comfortably beat expectations.

However, investors are now beginning to panic, since the talks on the ‘fiscal cliff’ programme have hardly made any progress so far.

Yesterday also witnessed the release of the UK GDP figures, which increased by one percent in the third quarter this year.

Since the figures show an emergence from a double dip recession, the Great British Pound surged to levels over 1.60 against the dollar.

However, with the OECD cutting future growth forecasts from 1.9% to 0.9% for 2013, the Pound has struggled to move beyond the 1.6020 levels, raising concerns that George Osborne will struggle to meet the deficit targets set out.

Positive Greek deal suggested by eurogroup

The Single European currency was unperturbed as Eurogroup members reached a conditional response to Greece’s necessary fiscal measures.Positive Greek deal suggested by eurogroupThey have approved to cut debts by €40 billion and have cemented the way for releasing the next tranche of bailout loan.

EU leaders emphasised during their press conference that Greek uncertainty has been resolved and praised the Greek government for their strong pledge to achieving a sustainable future.

The written statement suggests Greek aid “contingencies” would provide that Greece must continue to form its reserve account which is used to reduce debt, while the IMF is demanding that Greece must give up work a portion of its unpaid sovereign debt.

But, this job may be tough as the statement also documented the “deterioration” to the economy which might lead to cash flow difficulties.

Over to the US and Consumer confidence this afternoon is expected to show the highest reading for four years reaching 73.0 for November.

The data arrives alongside improvements in household sentiment could see further support for the Greenback reducing pressure on the Fed for additional monetary support.

The head of the Fed Ben Bernanke predicts a more broad-based recovery and we should see the central bank move away from its easing policy and the FOMC may continue to sit on the side-lines as the December 12 meeting as the region gets on a more sustainable path.

Back to the UK and yesterday we saw Canadian central bank Chief Mark Carney named as new Bank of England governor.

The former Goldman Sachs manager has a strong reputation and has been praised for this ‘pragmatic’ response to the financial crisis during his reign in Canada.

He is considered more hawkish that King following a rate rise in Canada to offset a housing bubble and may lead to the UK reducing QE and look to a rate increase in the near future.

The appointment is the first foreign head of Britain’s central bank in 318 year history and he will be the one of the most influential unelected officials in the UK.

Third time lucky for the Greek negotiations?

This week we have the resumption of the Euro group meeting to discuss the possible extension to the Greek restructuring plans.Third time lucky for the Greek negotiations?With the meeting last week producing nothing but another meeting there are high expectations on the IMF and Eurozone politicians to thrash out a plan that suits all involved.

With the announcement that Spain will receive €35 billion for the nations struggling banks any deal in regards to Greece will be taken as bullish by the markets.

With what started as a week of hope ended without much resolution from the all important Eurozone and EU Summit’s.

There was, however, a shift in sentiment last week which saw more risk-on in the markets with signs of growth in China as well as the possibility of wide spread Monetary Stimulus in Japan.

In Late trade on Friday we saw markets gain a sudden boost of confidence raising eurov US Dollar to 1.2968 and GB Pound/USD 1.6005.

In the US we have continuing negotiations in Congress over the “Fiscal Cliff” that is due to set in on January 1st.

After, what appears to be, the start of the US recovery these talks will be more prominent.

Tomorrow, US Durable goods orders are expected to show a negative figure with Fed Chairman Ben Bernanke speaking later in the day, likely to centre on the global economy and issues facing the continuing US Recovery.

This week we have the UK GDP being released, expected to show no growth YoY as George Osborne and David Cameron continue harsh budget cuts in place, even though the UK is likely to miss the deficit reduction target with last week’s figure showing Public Sector Net Borrowing actually increasing in October.