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IronFX Daily Commentary | 14/08/15

14.08.2015, 10am

Greece MPs expected to vote on the terms of the 3rd bailout program Greek lawmakers are expected to vote on the terms of the third bailout to unlock as much as EUR 86bn of aid before a EUR 3.2bn payment due to the ECB on Aug. 20. The parliamentary action is necessary to pave the way for Eurozone finance ministers, who meet later in the day, to come to a political agreement on the rescue package.

Turkey’s coalition talks break down Turkey’s PM said on Thursday that talks to form a coalition government with the main opposition party broke down and early elections now appears to be the only option. The efforts to create a coalition alliance between the long-governing AKP party and the CHP have failed as the two sides could not resolve differences on main issues, including foreign policy, education and the president’s role. Turkish lira plunged to a record low and came under renewed selling pressure, as the political instability added to the country’s ongoing turmoil as it battles Islamic State insurgents on its borders and Kurdish militants at home. We would expect USD/TRY to rise further as we head into the snap election, and could test the psychological 3.00 level in the near future.

Overnight New Zealand’s retail sales excluding inflation slowed to the lowest level since March 2012, pointing to a weak consumer spending and adding to the recent disappointing data. These soft figures will increase the expectations of a rate cut by the RBNZ at its September meeting and the NZD/USD could extend its bearish trend and break again the 0.6500 psychological barrier.

Today’s highlights: During the European day, the main data will be the preliminary Q2 GDP figures for the Eurozone as a whole. Eurozone’s preliminary GDP rate for Q2 is expected to have risen at the same pace as in Q1, while figures released from Germany, Europe’s growth engine, showed that the economy expanded +0.4% qoq in Q2, from +0.3% qoq in Q1. The figure was below expectations of +0.5% qoq. French GDP figures released earlier also missed expectations, which lead us to believe that the Eurozone’s GDP could disappoint as well. In such case, EUR could weaken a bit. Eurozone’s final CPI for July is also due to be released. The final figure is expected to confirm the preliminary reading, thus the market reaction could be limited at this release.

In the US, industrial production for July is expected to have accelerated from the month before. Following the strong retail sales for July on Thursday, another strong figure could prove USD-positive. The preliminary U of M consumer sentiment index for August is also coming out along with the surveys of 1-year and 5-to-10 year inflation expectations. PPI for July is also to be released.

 


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