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The Day Ahead - Wednesday 24th June 2015

Greece continues to be the major item on everyone's mind as a day of economic releases were overshadowed by the efforts to keep Greece in the Euro.

Tuesday proved to be a bad day for the Euro as it fell over 170 pips (1.53%) against the USD on the back of continued Greek concerns even as the key indicator out of the US - core durable goods - missed estimates.

Flash Manufacturing PMI reads were en vogue yesterday with China, France and Germany all releasing data and all beating expectations. China came in at 49.6 compared to a 49.4 forecast, which whilst above expectations still signals a contractin in the industry whereas France and Germany came in at 50.5 and 51.9 respectively. Italian retail sales also came out above expectations, at 0.7% against a forecast of 0.1%, although the bearing on the direction of the Euro was minimal at best.

Yet another trading day was dominated by Greek news though as Greece's bailout drama reached a crucial 48 hours. The measures required by Greece to get a deal done are now coming under fire with many saying it will have negative impacts on both growth and jobs. The government plan will claw in about EUR8bn from the economy over the next 18 months through a number of measures including higher VAT, higher corporation tax and phasing out some early retirment schemes. Locals are not in favour, but they face a stark reality of strict measures or losing out on the bailout programme completely.

This continued uncertainty was the main driver in Euro weakness throughout the day and outside of continued talks towards a deal in Greece there is not much on the news front for Wednesday. The only high impact release comes out of the US at 15:30 (GMT 3) when Q1 Final GDP is announced. The forecast is for -0.2%, compared to 2.2% last time around. Keep in mind this is the quarter to the end of March and is often a lower number due to the winter season. For comparison, the Q1 number last year was -2.9%, so even a negative number is to be taken in the context of continued economic recovery in the US.

Chris Reynolds | Director of Trading and Risk Management
Forex CFDs Metals
 

Filed under: China, EU, Euro, Forex, France, FX, GDP, Germany, Greece, PMI, US



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