Saturday July 11, 2015 - 11:03:06 GMT
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Greece Settlement at Hand? Week Ahead
John M. Bland
Possible Debt Settlement It seems that the various parties to the Greek debt negotiations were coming to an agreement heading into the weekend. Personally I doubt that the agreement will be a permanent solution to the massive debt problems that Greece faces, but it has been in the interest of no one for talks to blow up and for Greece to go into default on its debt. Greece still has debts that it will not be able to pay in the long run, but creditors do not want to take the hit all at once. A debt extension at this time will give them leeway to write down their exposure more gradually. In time that hit will have to be taken. As for Greece, additional austerity will only slow the economy more and hurt tax receipts making its economic prospects even worse. There are also the optics of reducing support for those truly in need.
Forex Trading Implications Forex Traders have been playing what I call "Headline Roulette" for the past few weeks, with the most important market influence the next random headline that comes across the news wires. Until an agreement is nailed down, those with positions remain vulnerable to what any party to the negotiations might say next to the press. With the EURO the focus of the Greece story, presumably the unit will initially benefit from a settlement, but subsequently it could weaken it resumes the role as a primary carry trade funding currency.
Weekly Calendar The upcoming week is an active one for major economic data. -- Monday, July 13, is a quiet session with only Chinese Trade due. -- Tuesday July 14, sees final German June CPI, UK CPI, the German ZEW Survey and U.S. Retail Sales Data. -- Wednesday July 15, features a Bank of Japan decision, U.K. Employment, the U.S. Empire PMI, PPI, Industrial Production, testimony by Fed Chair Yellen, and the Fed's Beige Book. There is a Bank of Canada decision due as well. -- Thursday July 16, sees EZ final June inflation, an ECB decision and the second round of Yellen's Congressional Testimony. -- Friday July 17, is a busy day with key Canadian inflation data, U.S. Housing Starts and CPI data slated. Be sure to refer daily Global-View to see the continuously UPDATED Economic Calendar and the Forex Forum for the complete list of key items (actual data, selected charts, etc.) as they are released.
John M. Bland co-founder www.global-view.com
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