Friday, 29 May 2015 16:08
Analyst Jim Reid at Deutsche Bank reviews the recent developments in the Greek-EU debt talk scenario.
“Moving on, the Greece saga continues with headlines aplenty”.
“Yesterday we heard more push back from the European side that Greece and its Creditors are still not in agreement and seemingly still struggling to come to terms on reforms”.
“The IMF’s Lagarde was noted as saying that ‘things have moved, but there is still a lot of work to do’ in comments on German TV ARD”.
“The European Economic Commissioner Moscovi said that the two sides are ‘certainly not the three quarters of the way’ and that ‘we need to work day and night’.
“The comments from the Greek side continue to paint a picture of progress and hope that a deal is imminent, which has been in stark contrast to the comments from the Creditors for some time now”.
“Greek government spokesman Sakellaridis said yesterday that ‘this optimism is not just words, it is based on the experience of the previous weeks and the progress achieved’.
“Greece has seemingly over emphasised the ‘progress’ and achievement in negotiations for months now, so it’s worth being careful over interpreting most headlines coming from the Greece side”.
Friday, 29 May 2015 15:57
The shared currency picked up further pace vs. the dollar on Friday, pushing EUR/USD to challenge session tops near 1.0970.
EUR/USD eyes 1.10, US GDP
The pair saw its upside boosted despite mixed results in the euro area showed Private Loans coming in flat vs. expectations for a 0.2% gain, while the M3 Money Supply expanded more than anticipated during April, at an annual pace of 5.3%. Further data showed Italian GDP expanding 0.3% QoQ during Q1 and 0.1% on a yearly basis, surpassing prior surveys.
In the meantime, the G7 meeting has resumed in Dresden with the re-negotiation of the Greek debt taking centre stage, mainly following yesterday’s comments by IMF Chief C.Lagarde.
Friday, 29 May 2015 15:07
Strategist Kit Juckes at Societe Generale recommends a long position in the US dollar.
“The dollar remains a buy, even if the bet risk-reward isn't to buy it against the euro”.
“Too many shorts and the odds do favour a cliche-satisfying last-ditch move to come back from the Greek abyss and kick the can a few yards further down the mule-track”.
“So we would rather be long USD against CAD, AUD, NZD, JPY and GBP instead”.
“If I had to dream up a single gauge to guesstimate when and where the dollar will peak, I'd go for 5-year TIIPS yields”.
“One measure is a bonkers idea but I reckon the dollar peaks after TIIPS yields, and at -6bp, they surely aren't at their highs”.
“I'll guess a further 1% rise in those, and I'll have a stab at H1 2016 for timing. That should give the dollar a further 5-10% rally, assuming ECB QE last till Q3 2016 and the BOJ goes on printing into next year too”.
Friday, 29 May 2015 14:57
Gold prices erased minuscule gains witnessed in the Asian session to trade largely unchanged on the day at USD 1188-1189/Oz levels.
Gold awaits US Q1 GDP
The investors now await the US Q1 GDP figure, which would provide an insight into whether or not the US economy is strong enough to withstand a rate hike in 2015. The second estimate of the US Q1 GDP is expected to show a downward revision to -0.9% from the preliminary estimate of 0.2%.
In the meantime, the movement in the USD index and sentiment in the major European equity markets could continue to influence the metal.
Friday, 29 May 2015 14:20
The Swiss currency lost strength and erased gains versus the US dollar in the European morning, pushing USD/CHF to fresh session highs. The major erased losses and trades at session highs after the Swiss franc was badly hit on GDP data which showed that Switzerland's economy decelerated in the first quarter of 2015.
USD/CHF trades below 0.9500
Currently, the USD/CHF pair trades 0.16% higher at fresh session highs of 0.9456, retracing from 0.9409 handle. The pair climbed higher after Switzerland revealed a 0.2% decrease in Q1 2015, following a revised 0.5% growth Q4 2014. Market consensus had bet on 0.2% growth.
Meanwhile, a halt in the greenback’s across the board also pushed the pair higher. The dollar index which measures the greenback’s strength against its major peers, now trades flat at 97.13. Markets now await US GDP data for major imapct on the pair.
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