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Forex: Shaking off Greece

Yesterday showed that there is no second guessing events in Greece. There was no surprise to see the IMF deadline passing without payment, although Greece did put in a request for a last minute new deal, which was quickly rejected by Germany. That said, there will be a conference call today between Eurozone Finance Ministers, but hopes are not high for progress ahead of the weekend’s referendum. In markets, there was a sense of stability yesterday, with peripheral bond yields falling modestly and equity markets holding up well for most of the session (softening into the close). The single currency was softer for most of the session, but volatility was towards more normal levels. The relative stability in markets is not supportive to the Greek government, who are currently playing on the fallout from a Grexit globally as a reason why it won’t be allowed to happen.

Looking to Asia, the final PMI data in China was modestly negative, playing into the slowdown story. Also, the latest Tankan survey in Japan proved to be a mixed affair, but the results were not indicative of an economy gathering recovery pace. This supported a slightly weaker tone to the yen, USDJPY reversing back above the 122.50 area. For today, markets will once again be watching events in Greece, with distractions from the US ADP data and manufacturing PMI later in the day. It’s likely that trading is going to remain subdued as this is the first day of a new quarter and larger investors are unlikely to commit funds until the Greek situation is clearer.

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