Wednesday, June 24, 2015

Greece not over yet...

•     Optimism over Greece means monetary policy divergence returns as driver of FX
–    Market now discounting successful resolution of Greek drama – Greek stocks up 6.1% yesterday, bank stocks up 10.4%
–    Focus now back on Fed and likelihood of first rate hike in September
–    Better-than-expected US new home sales, continued recovery in core durable goods orders suggests US economy still expanding
–    Fed Gov. Powell says he sees 50-50 chance of hike in Sep, maybe another in Dec

•     Greece not over yet, though
–    Some SYRIZA members object to harsh new measures that include further cuts to pensions, rise in taxes for people & companies
–    Will vote on measures over the weekend. Greek parliamentary approval is necessary

•     API stats show large drawdown in inventories; oil rallies
–    Boosts commodity currencies, with AUD, NZD, CAD and RUB gaining
–    Subhead

•     Today:
–    Eurozone: German Ifo survey expected to be soft, could further weaken EUR; EU finance ministers hold emergency meeting in evening to discuss Greece

–    US: 3rd estimate of Q1 GDP expected to be revised up = USD-positive

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