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The Day Ahead - Friday 26th June 2015


Today feels a little like groundhog day in the markets...

Once again the only key economic release was out of the US and once again it came out exactly as forecast. This time it was Unemployment claims coming in at 271k as expected.

One thing that CHF watchers will have paid attention to was the speech from SNB chairman Jordan who stated that “the Swiss franc is currently significantly overvalued.” Based on the action of the SNB earlier this year, this is not exactly ‘news’ of course.

Once again the dominating topic overnight was Greece but once again nothing happened. The EURUSD price closed 1.1 pip higher than it opened acting as a clear indication that nobody has an idea on which way this is going to pan out. Once again we’ve heard optimism from Greek leaders that their plans are good enough to meet the terms for their next phase of bailout cash, and at the same time others said there was no forward progress with Angela Merkel saying that they had “gone backwards.”

However, in the last hour or so signs of progress and optimism are being made – not that the market is reacting at this stage. Under pressure lenders are apparently retreating on some issues and Alexis Papachelas (an informed political analyst) said he thinks “an agreement is very close.” This comes as relations have thawed somewhat after very tense negotiations led to outbursts in Athens.

Riot police have been out across the Greek capital to keep in check the far left and communist minded protestors who are against the proposed spending cuts that are likely to come with any deal whilst Costa Lapavitsas, an MP in the ruling Syriza party, made a call for Greece to leave the Eurozone saying an “exit would free the country from the trap of the common currency, allowing it to implement policies that could revive both economy and society.” A deal is going to need to be worked on over the weekend it seems as many now believe if it is going to get done, it needs to happen before financial markets open on Monday.

Outside of Greek debt crisis, we have another quiet day on the economic news front. New Zealand trade balance is due out this morning (01:45 GMT 3) with the forecast for a negative number at -90M, this is compared to last month’s 123M which beat estimates. The revision of previous months is also worth looking out for as the last read in May say April’s numbers get revised up by an additional 123M.

Bank of England Governor Carney will take part in a panel discussion at the conference on Inclusive Capitalism later at 17:15, and some people will be on the lookout for him to give some insight in to the interest rate direction – although I wouldn’t expect much to happen at such an event.

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