European markets are trading higher this morning as there is nothing new developed between Greece and its creditors. The story has become insanely boring and every day one side is saying that yes we are very close to form a deal- the Greek officials usually confirm this in their statement, but then in the next few minutes we will know that there is no truth in that when the ECB officials or any one from the German official side pour cold water on these hopes
Yesterday we had our hopes up once again that a deal will be reached by Sunday and these hopes were shot down on the back of the news that there are no chances for reaching a deal by Sunday. This is the type of uncertainty and frustration we have been facing through out the month of May. However, as we said before, that Greece is running out of time, running of options, running out of tricks and most importantly running out of money- perhaps one of the element that creditors were waiting for that once Greece run out money they will have no option left, but to cave in to their demand.
But this entire strategy had extremely bad impact on Greece economy and on its equity market. Both sides really need to sit together and finalise the deal once for all. Given the pressure Greece is going to come under next month, it is highly likely that they will find a solution because they certainly dnt have 1.6 billion euro to pay their bill.
Back in the UK, we had the GDP revision data received yesterday for the Q1 and it has one stamp all over it that the economy is still consuming a lot more than it is producing. The import numbers were much more higher which created the budget deficit even higher. Yes sterling strength is another major factor which is making the export sector very less attractive especially against the euro where a massive quantitative easing is taking place. Weaker euro zone currency, lower oil price and the ECB QE are all factors which are impacting the export sector for the UK.
As for the U.S., we will have revision for the Q1 GDP data and the forecast is that is really going to
sting- a number which not many are expecting. This may pull the dollar lower however, the main focus remain towards the upcoming readings which are due next week as they will give us more information about the health of the Q2. The question really is if the Q2 growth can make the investor forget what really happened during the first Q1. A robust reading for the next week will also raise the hopes for the rate hike.