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    The Day Ahead - Wednesday 8th July 2015


    Greece may be ‘the word’ at the moment, but a lot of people are probably getting tired of hearing it, and not just those reading about it, but the exasperation that comes across from many senior European figures seems to be growing.

    The Euro fell slightly against the US Dollar yesterday, but only by 0.4% on a day where the USD saw Trade Balance figures out slightly above expectations. Continued uncertainty mixed with frustration and annoyance appears to be keeping the price relatively flat right now. The Eurozone had asked Greece to submit fresh plans following the result of the weekend’s referendum. The Greeks brought no such plans but reportedly merely suggested a few changes to an old proposal.

    After failing to produce anything of substance, which meant no new progress, Greece has been given a deadline of Thursday to submit some fresh plans. Following that, Sunday will see a meeting of all 28 members of the EU with European Council President Donald Tusk saying it was the “most critical moment in the history of the Eurozone.”

    Angela Merkel, the German chancellor is coming under increasing pressure in her home country to reject further bailouts and to kick Greece out of the Euro and she said that the leaders respected the referendum, but had a “shared responsibility” to the EU which sounded a little like saying that, regardless of the result Greece and the rest of the Euro members need to come to an agreement, whether it complies with the will of the people or not.
    Outside of the continued meetings in Brussels, there is unlikely to be much Euro focused news on the horizon today.

    Yesterday saw the Reserve Bank of Australia keep interest rates on hold at 2%, which was expected by all concerned with most watchers looking to the accompanying statement for the real direction. Unfortunately there wasn’t much to get from Glenn Stevens’ comments. Much of the tone of the statement was pointing to a wait and see approach noting that the Aussie has depreciated against the USD over the past year but “less so against a basket of currencies.” A key comment is that “Further depreciation seems both likely and necessary” which appears to indicate that only if the Australian Dollar does not fall organically to what they deem to be a correct rate will they intervene.

    Outside of Canadian building permits being released at 15:30 (GMT 3) there is little in the way of economic releases. Eyes will however be on the UK budget release, which comes two months after the general election and the FOMC meeting minutes. George Osborne looks set to announce plans on reducing fiscal deficit focusing mostly on cuts to welfare, with 12bn expected to be cut.


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