Wednesday, 01 July 2015 15:29
The monthly Citi/YouGov poll on Wednesday showed UK citizen’s expectations for inflation in the next 12 months rose in June.
Inflation expectations rose to 1.4% in June, the highest reading since March, from 1.0% in May. Inflation expectations for next five years to 10 years rose to 2.7% from 2.6%.
Meanwhile, a Bank of England staff paper showed Britons’ falling inflation expectations could pose risks to BOE’s 2% inflation target.
Wednesday, 01 July 2015 14:24
Economists at ING, note that yesterday’s events marked another symbolic step in the Greek crisis but also confirmed that the issue between Greece and its Eurozone creditors goes beyond numbers and substance.
“Greek Prime Minister Tsipras pulled another rabbit out of his hat yesterday, submitting a new proposal to the Eurozone creditors. The proposal was a request for a two-year programme funded by the ESM (without IMF involvement). This programme would cover all Greek financial needs and would also include debt restructuring. According to media reports, the proposal did not include any new reform measures.”
“In a telephone conference last evening, the Eurozone finance ministers quickly discussed the proposal but the conclusion was clear: nice try but far too late. Eurogroup chairman Dijsselbloem said that “the political stance of the Greek government doesn’t appear to have changed”. Requests from Tsipras for an extension of Greece’s bailout programme or debt relief were not possible. Nevertheless, the Eurogroup will have another conference call tomorrow.”
“All of this means that Greece will not reimburse an IMF loan and the official bailout programme has expired. As regards the IMF loan, we stick to our view that this will not trigger a credit event. According to the IMF rules, missing a payment will now start an entire procedure with several steps which after a period of up to 24 months could lead to the expulsion of Greece from the IMF.”
“The same holds for the expiration of the second bailout programme. Technicallyspeaking, nothing will change in the short run. However, the fact that the programme has officially expired means that, legally, it cannot be extended anymore. No matter what the outcome of the referendum and consequent steps of the Greek government will be. From a legal and technical perspective, any new compromise would now start from scratch and would have to be a third bailout programme.”
Wednesday, 01 July 2015 14:19
Jim Reid, Analyst at Deutsche Bank, assessed the recent events in the Greek front.
“Before we got the non-payment confirmation, headlines yesterday were dominated by various reports of extension requests”.
“Greece again made a request for a short-term extension of the existing program – which was swiftly rejected – while we also got the news that Athens submitted a request for a 2-year loan from the ESM”.
“Although Eurozone finance ministers are set to discuss the request today (expected 10.30am GMT), the tone from Europe is one of pushback with German Chancellor Merkel in particular saying that there will be no new negotiations until after Sunday’s referendum”.
“Eurogroup President Dijsselbloem, although acknowledging that the request will get looked at, also highlighted that ‘a new program takes time and will have to contain tough measures and payments’, while ‘the situation will unfortunately further deteriorate and the only way to solve this quickly is when the government will take another political position’.
“Certainly the bulk of the commentary on the wires was one of the offer being something of a non-starter in any case”.
Wednesday, 01 July 2015 14:13
Alan Ruskin, Macro strategist at RBS, offers the Q1 IMF COFER summary, and further explains that the negative rates might not have been necessarily the key factor behind EUR’s slide.
“Q1 IMF COFER data showed a sharp quarterly increase in the USD’s share of allocated reserves from 63.1% to 64.1% and a steep decline in the EUR share from 22.1% to.20.7%. These headline grabbing numbers are a very misleading as an indication of ‘reserve diversification’. Adjusting for valuation effects, EUR reserve holdings went up sharply by 60bn Euros on the quarter, compared with a $49bn increase in USD holdings.”
“The Q1 2015 data much like the Q4 2014 numbers did not validate the thesis that official EUR selling allied to negative rates was a big factor behind EUR/USD’s dramatic slide over this period. Instead the large increase in Euro holdings provides i) some tentative signs that Central Banks do not want their EUR share of allocated reserves to drop dramatically below current levels; and, ii) the private sector reallocation from EUR fixed income assets to USD Treasury, agency and corporate bonds still shows up as the dominant flow behind USD strength in H2 2014 & Q1 2015.”
Wednesday, 01 July 2015 13:57
WTI oil futures on the Nymex dipped in Asia and extend losses heading in to European session as traders digest the latest developments in Greece and Iran as well as the fresh US inventory report.
WTI back below $ 59
Currently, WTI trades -1.40% lower at 58.63, retracing from 59.09 highs. Oil prices edged lower today after the latest data showed a rise in US stockpiles and production, with the crisis in Greece weighing on the commodity as well.
US crude stockpiles rose 1.9 million barrels in the week to June 26, the American Petroleum Institute said in a weekly report on Tuesday. Markets had been expecting about a 2 million barrels drop.
For the measured week, the Energy Information Administration (EIA) is expected to show a 2.5 million decline in US crude inventories. The report is due to be released later in the day. Markets now await EIA report along with key US macro data for further moves on the black gold.
Meanwhile, six major world powers and Iran announced on Tuesday that the deadline for reaching an agreement over Tehran's nuclear program was extended until July 7.
WTI Technical Levels
WTI oil has an immediate resistance which stands at 60 levels above which gains could be extended to 60.63 levels. Meanwhile, support is seen at 58 levels from here losses could be extended to 57.21 levels.
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|Wed Jul 1 11:00 GMT
||USD MBA Mortgage Applications
|Wed Jul 1 12:15 GMT
||USD ADP Employment Change
|Wed Jul 1 14:00 GMT
||USD ISM Manufacturing
|Wed Jul 1 14:00 GMT
||USD ISM Prices Paid
|Wed Jul 1 14:00 GMT
||USD Construction Spending (MoM)
- UK inflation expectations rise in June
- Wednesday, 01 July 2015 15:29 WIB
- Greece second bailout programme expires, third on the way?
- Wednesday, 01 July 2015 14:24 WIB
- Greece deal talks set to resume ahead of referendum
- Wednesday, 01 July 2015 14:19 WIB
- Central Bank Reserves and negative EUR rates
- Wednesday, 01 July 2015 14:13 WIB
- WTI dips in Asia, trades below $ 59
- Wednesday, 01 July 2015 13:57 WIB
- Gold trades moderately weak
- Wednesday, 01 July 2015 13:32 WIB
- USD/JPY off highs, side-lined around 122.50
- Wednesday, 01 July 2015 11:00 WIB
- AUD/USD: Buyers in control despite China PMI miss
- Wednesday, 01 July 2015 10:55 WIB