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Childish behavior dominates over Greek negotiations while ZEW & CPI data in focus

The childish behavior continues on both sides as each party is blaming the other side for their unreasonable demands and their reluctance to not to give up. This what we call a Greek saga, which has been on the front pages since the start of this year, but given the time is now actually running out with only option to throw the towel and agree on something which can bury this non sense talk once for all. But, it appears that both sides are determined to sacrifice what ever they have worked for, no matter what the consequences could be. They have blind folded themselves to all the possible dangerous outcomes and are determined to stay stubborn or incase of Greece, playing some sort of mind games so called the game theory.


If anyone could do something at this stage, it will be the ECB who is holding the bloodline for Greece in terms of ELA and the bank announcing yesterday that there are no limits when it comes to the ceiling of the ELA, is making the Greek officials more stubborn. The ECB can use its power to make the German side understand that some sort of debt relief is essential and is not unreasonable and at the same time they could also force Greece to adopt reforms in return and make them practical. What is not acceptable is the childish behaviour where each side is blaming the other knowing that they need to adopt more flexible approach in order to resolve this hurdle.


Thursday now stands as the major important day when the new deal will be presented to Greece and take it or leave it card will also be on posted to their doors. We have passed so many deadlines like this, but the attitude of the creditors is confirming that this could be the last chance to avail, because Capitol control could be the next avenue used by the EU officials. Another 400 million euro has left the Greek banks as depositors have reported yesterday. Investors are looking to park their money to somewhere which is more comfortable for them and this has also widened the spread difference between German and Italian bond yields. Both, Italian and Spanish bond yields are creeping higher as the risk of contingency increase with every day lapsed.


Moving away from this, the economic docket has two important set of economic data due to be released today. Firstly, it is the German Zew number which will hit the wire and the forecast is for 37.3 which is a lower reading as compared to the previous month’s print of 41.9- thanks to Greek saga. Finally, we have the UK CPI economic data which due this morning and all eyes will be focusing on this number. The forecast is 0.1% and the previous reading was at -0.1%. The recent bound in oil price which pushed the air fares could help to produce a number which could fade in the thoughts of deflation. The core CPI number which subtract the oil price is also forecast to produce a better reading of 1.0% from its previous reading of 0.8%.

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