Traders Focus Returns to Greece
April 21, 2010 - 7:46 am by Forex District · Leave a Comment
Forex News and Events:
With the Goldman Sachs story clearly fading from the markets collective memory and meteorology bugs sent back to the weather channel, investors once again had time to focus on Greece. Yesterday Greece raised €1.95 billion ($2.63 billion) through a 3-month Treasury- bill auction to yield 3.65%. While demand was firm and temporarily soothed investor concerns, today the 10yr yields climbed over 8.00% highlighting persistence fears.
While Greece is reported to have the cash to pay its April debt, there are real worries regarding how the €8.5 billion bond, which matures on May 19th will be covered. While Soros’ comments regarding Greece’s “death spiral” might be a tad extreme, there are still considerable barriers ahead of a meaningful resolution. In addition, ECBs Weber clarified that the €80bn Greece needed to avoid default was not his figure and he was merely using the number to illustrate that liquidity requirements were fluid and not that he had particular faith in that number.
Today in Athens, EU and IMF officials will begin discussions on the bailout plan activation. Given the recent upward surge in yields and Bank of Greece Governor George Provopoulos support of a rescue, we believe in the next 10 days the EU / IMF safety net will be activated. EURUSD has been under significant pressure and with most of the negative news already priced in, a bailout should give the EUR a boost short term. The big news yesterday (outside corporate earnings) was the considerably more hawkish Bank of Canada’s accompanying statement.
The BoC held rates steady but dropped its conditional commitment to stay neutral until July, and added that conditions were right to remove monetary stimulus. We had believed a few central banks including the BoC (RBNZ and Riksbank) had fallen behind the curve and are now expecting their catch up to give the underlying currencies a lift.
Today’s Key Issues (time in GMT):
00:00 EUR EU-IMF delegation in Athens, meetings could last 2-3 weeks.
08:30 GBP BoE MPC April 7-8 meeting minutes.
08:30 GBP Mar claimant count, -10k eyed; last -32.3k.
08:30 GBP Feb ILO unemployment, 7.8% eyed; last 7.8%.
08:30 GBP Feb avge weekly earnings, +2.5% eyed; last +0.9%.
12:30 CAD Wholesale Trade Feb +0.7% exp , prev +3.0%
23:50 JPY Trade surplus, bn yen
