Posted on 30th June 2015 by barry norman in Stockpair Daily Insight

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The Euro Reverses Course & Climbs

June 30, 2015

Barry Norman

 

alexis and drachma forexwordsAs the month comes to a close, so does another deadline for Greece. At midnight today, the official EU bailout program comes to an end along with any new provisions and negotiations. In other words the slate is wiped clean. With no promises of any support and no legal way to offer support Greece is essentially on their own. Before this deadline comes another important deadline will be reached. the deadline for Greece to pay the €1.6bn due to the International Monetary Fund is 6pm Washington DC time or 11pm BST.

Greece will not make the €1.6bn due to the International Monetary Fund on Tuesday, the Wall Street Journal is reporting:

Greece won’t make a debt repayment to the International Monetary Fund due Tuesday, a senior Greek government official said Monday. Earlier this month, Greece had notified the IMF it plans to bundle its loan repayments falling due this month into one payment of around 1.6 billion euros, which is due Tuesday. The IMF has said that Greece will immediately be in arrears if it fails to make the debt repayment.

In a turn of events, the euro plunged in the Asian session falling over 150 points to recover a bit as European markets opened, but then reversed course to end up 80 points at 1.1246. The greenback is trading in the red at 95.00 down 60 points after US pending home sales tumbled.

currency monday

The European Commission chief, Jean-Claude Juncker, has said he feels “betrayed” by the “egotism” shown by Greece in failed debt talks.

He said Greek proposals were “delayed” or “deliberately altered” but added the door was still open to talks. Along with several other European leaders, he has urged a yes vote in the snap referendum called for Sunday.

The euro proved broadly resilient on Monday to Greece’s moving one step closer to an exit from the single currency, helped by intervention by the Swiss National Bank and investors concluding that the situation in Athens still has some way to run. But though the euro initially fell sharply in response, to as low as $1.0956 as investors displayed a “complete lack of panic” over Europe’s single currency, as Rabobank senior currency strategist Jane Foley put it.

Earlier, the Swiss franc, which tends to appreciate at times of market uncertainty, had traded at a four-week high of 1.0315 francs per euro. But it came off those highs as the Swiss National Bank said it intervened in the market to weaken it, and was last trading down at 1.0418 francs.

Posted on 28th June 2015 by barry norman in Stockpair Daily Insight

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Countdown To Eurozone Crisis

June 29, 2015

Barry Norman

 

Greece on mapMany market watchers thought that once the ECB started up their huge stimulus program that the problems in the Eurozone were behind. This is not proving to be the case. Greece’s financial situation has always been a thorn in the side, but it also seems to be the plug in the dam. The slow pace of the assistance from the ECB might have put too much strain on the other fragile European economies. Even though Portugal, Spain and Italy are showing signs of life, they remain on the edge.

The Greek crisis, having been building for years, is blowing the hardest. Beyond the potential for the first Eurozone exit, Greece could be at risk of becoming a failed state, an outcome that would pose a multi-dimensional threat to the rest of Europe. Mitigating the adverse humanitarian consequences and geopolitical impact of this storm would be no easy feat.

The second problem is rolling in from the EU’s east, is the costly military conflict in Ukraine’s Donbas region. The crisis in eastern Ukraine has been contained only partly by the Minsk II ceasefire agreement, and reflects the deepest rupture in the West’s relationship with Russia since the Soviet Union’s collapse.

The third stressor is the political problems brought about by the rise of populist political movements — poses yet another serious threat. Energized by broad voter dissatisfaction, particularly in struggling economies, those political movements tend to focus on a small handful of issues, opposing, say, immigrants, austerity or the European Union — essentially whomever they can scapegoat for their countries’ troubles.

Already, Greek voters handed the far-left anti-austerity Syriza party a sweeping victory in January. France’s far-right National Front is currently second in opinions polls. The anti-immigration Danish People’s Party finished second in the country’s just-concluded general election, with 22% of the vote. And, in Spain, the leftist anti-austerity Podemos commands double-digit support.

The markets are focused Greece which is in center stage but EU ministers need to be paying attention to the other rings in the three ring circus before doomsday. But policymakers should not be so distracted by it that they fail to prepare for the other two possible acts — and, much more worrisome, the possibility that they merge into a single more devastating one. Europe’s leaders must act now to minimize the risks, lest they find their shelters inadequate to the extreme weather that could lie ahead.

 

Posted on 27th June 2015 by barry norman in Stockpair weekly Insights

Major Economic Events for the week that you should be monitoring:

Time Cur. Event Forecast Previous  
Monday, June 29, 2015  
    USD Pending Home Sales   1.2% 3.4%  
Tuesday, June 30, 2015  
    EUR German Unemployment   -5K -6K  
    GBP GDP (YoY) (Q1)   2.5% 2.4%  
    EUR CPI (YoY) (Jun)   0.2% 0.3%  
    CAD GDP (MoM) (Apr)   0.1% -0.2%  
    USD CB Consumer   97.2 95.4  
Wednesday, July 1, 2015  
    New Zealand – Queen’s Birthday  
    JPY Tankan Large   12 12  
    JPY Tankan Large Non-   22 19  
    CNY Manufacturing PMI   50.3 50.2  
    CNY HSBC Manufacturing PMI     49.6  
    EUR German Manufacturing   51.9 51.9  
    GBP Manufacturing PMI   52.5 52.0  
    USD ADP Nonfarm   217K 201K  
    USD ISM Manufacturing   53.1 52.8  
Thursday, July 2, 2015  
    GBP Construction PMI (Jun)   56.5 55.9  
    USD Nonfarm Payrolls (Jun)   230K 280K  
    USD Unemployment Rate   5.4% 5.5%  
Friday, July 3, 2015  
    United States – Independence Day  
    AUD Retail Sales (MoM)   0.5%    
    GBP Services PMI (Jun)   57.3 56.5

 

Global Exchanges

Wall Street ended mixed Friday and down for the week despite a promising start Monday and Tuesday. Weakness in semiconductor, solar and drug stocks weighed on the Nasdaq, which finished down 0.6%. The Dow Jones industrial average led with a 0.3% gain, boosted by a 4% surge in Nike which reported late Thursday. The S&P 500, meanwhile, was down a fraction. Preliminary numbers showed volume was higher across the board.

China’s benchmark Shanghai Composite index dropped by 7.4% on Friday, as hundreds of individual stocks lost 10%, the index’s daily downward limit. The Shenzhen Composite, which is heavy on tech stocks, closed down 7.9%.

The dramatic moves could further unnerve investors, who are already reeling from last week’s dismal performance by China stocks. The Shanghai Composite is now solidly in correction territory, having fallen 12% over the past five trading sessions as investors grow increasingly wary of a possible stocks bubble.

Most of the week, the Greek drama has kept investors anxious. The Eurogroup will meet again over the weekend in a last-ditch effort to hammer out a deal before Greece has to repay 1.54 billion euros  to the International Monetary Fund on Tuesday. European stock markets closed mostly higher Friday.

sp and shanghai

Currency Markets

Currencies and commodities “remained at a virtual standstill for most of the Asian and European dealing as traders’ awaited further developments in the Greek negotiations with EU which would occur at special summit meeting scheduled for Saturday,” said Boris Schlossberg, managing director of foreign-exchange strategy at BK Asset Management, in a note early Friday. The Dollar Index was up less than 0.1% to 95.270 from 95.187 late Thursday. For the week, the index is up 1.3%. Meanwhile, the euro recently traded at $1.1198 on pace for a weekly drop of 1.4%.

global currency

Commodity Markets

Oil saw a third straight session loss Friday, with traders concerned that a potential deal with Iran could add to a global glut of crude supplies. Crude fell 7 cents, or 0.1%, to settle at $59.63 a barrel. The commodity was down 0.6% for the week.

Posted on 26th June 2015 by barry norman in Stockpair Daily Insight

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Still No Deal With Greece

June 26, 2015

Barry Norman

 

greece has a dealEuropean markets moved lower as divisions between Greece and its creditors remained substantial ahead of the Eurogroup meeting. Most European indices lose 0.50%. In the US, Equities traded slightly higher following stronger eco data, but soon reversed their gains.

Euro area Finance Ministers were faced with competing proposals ahead of the Eurogroup meeting this afternoon. Greece’s three creditors agreed on a set of documents that were sent to finance chiefs to review as basis for a deal, but Greece did not except them and submitted its own proposals. The Eurogroup meeting was interrupted after two hours without an agreement in sight.

The European Central Bank held a crucial cash lifeline for Greece unchanged, a source familiar with the discussion said, as the head of the Bundesbank objected the way Greek banks are being funded.

Talks on the Greek debt crisis between Eurozone finance ministers have ground to a halt after Athens rejected counter-proposals from its creditors. With all this happening the euro traded within a tight range today and is holding just at the 1.12 level. The US dollar traded at 95.43 keeping pace with the euro. Gold is also flat at 1172.60.

greek debt

Eurozone finance ministers came to Brussels for an emergency meeting but failed to bridge their differences with Greece, in the fourth diplomatic failure in eight days. The EU commissioner for economic and financial affairs, Pierre Moscovici, said Greece and its creditors were still at loggerheads over reforms to Greek pensions and VAT rates, which lenders want to be toughened as a quid pro quo for giving Athens further bailout funds.

Greece’s creditors – the European Commission, International Monetary Fund and European Central Bank – are demanding further spending cuts in Athens before agreeing to release the €7.2bn in funds that the country needs in order to meet a €1.6bn payment due to the IMF next Tuesday.

After surging by 1.1% intraday, Germany’s DAX 30 ended up less than 2 points at 11,473.13. The Athex Composite Index finished 0.1% higher at 781.68, but had been by as much as 1.8%. Greek stocks opened the session lower by more than 1%. As trading closed in Europe, Eurozone finance ministers were looking at documents that laid out a possible financing deal for Greece. But they warned they wouldn’t accept anything that strays too far from the country’s original agreement with creditors.

Posted on 25th June 2015 by barry norman in Stockpair Daily Insight

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Creditors Reject Greece’s Proposal

June 25, 2015

Barry Norman

 

greece-euro-crisis-forexwordsWhere does Greece go from here? Greek Prime Minister Alexis Tsipras on Wednesday told his government that the country’s international creditors have rejected Athens’s latest reform proposal, according to media reports, citing a Greek government officials. Greece submitted the proposals on Monday morning in the latest bid to unlock much needed financial aid. Tsipras’s comments on Wednesday came before he headed to Brussels for an emergency meeting to discuss the reform measures with the heads of lender institutions, Bloomberg reported.

Greek creditors rejected the latest Greek proposals today with the IMF raising objections that the proposals relied almost exclusively on increased employee contributions to make up shortfalls in the pension system. Creditors handed the Greek government a new proposal, which was again rejected by the Greek government. No request was made to ECB today to extend the limit of its emergency liquidity assistance to Greek lenders, a Greek central bank official said as about €100 million returned to the county’s banking system on Tuesday.

European equities turned red after a post on Tsipras’s official Twitter account, the prime minister criticized certain creditors, saying their stubbornness in not accepting equivalent reform measures hadn’t been seen in negotiations with Ireland and Portugal.

greek debt

The euro reversed earlier gains to trade at 1.1180 and continues to decline. The US dollar gained 4 points to trade at 95.64. The third estimate of US Q1 GDP showed an upward revision from ‐0.7% Q/Q annualized to ‐0.2% Q/Q annualized, in line with market expectations. Upward revisions were mainly based in personal consumption, investments and inventories.

Greece is still in intensive care, and looks likely to remain so for the foreseeable future — the Greeks look willing to do just enough to stay in the Eurozone, while the rest of Europe is willing to offer it just enough money to stay afloat while making it impossible to grow.

The big question is what will happen next and what will be the ramifications to its neighbors and the banks in Europe. Most of Europe has moved away from Greek debt over the past years and the biggest creditors remain, the IMF, the ECB and the Eurozone’s Financial Stability Facility and bilateral loans from Eurozone countries.

eurozone debts

Posted on 24th June 2015 by barry norman in Stockpair Daily Insight

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Euro Takes A Fall

June 24, 2015

Barry Norman

 

greece eurEuropean shares extended yesterday’s gains on optimism a Greek deal might be reached later this week. Greek stocks continue to outperform gaining almost 5%. US Equities trade slightly higher supported by decent to strong US eco data.

Greek lawmakers reacted angrily to the concessions its government offered in debt talks, especially the offer to raise a range of taxes as well as pension and healthcare contributions, and a parliament’s deputy speaker warned the proposals might be rejected.

The ECB raised the limit on emergency liquidity assistance available to Greek banks by a little less than €1 billion, sources said today. Yesterday, the ECB raised the amount of ELA funding by €2 billion.

The euro tumbled in excess of 150 points today to trade at 1.1189 as the US dollar gained 95 points after better than expected housing data. The dollar adds to gains as numbers for durable-goods orders arrived below expectations, signaling falling demand among American businesses for spending on big-ticket items. But some underlying numbers were more upbeat. The dollar ticked up to Y123.97 from Y123.88 beforehand, with the day’s gain at 0.5%.

102780507-euro_7_days.530x298

The single currency also failed to get a boost on Tuesday from data for the euro zone which showed that business activity in the 19-member bloc expanded at its fastest pace in four years in June.

Rabobank’s Foley argued that the euro’s recent fall was down to the single currency acting as something of a safe haven, given its large current account surplus. The euro has fared well in the face of mounting uncertainty surrounding the euro zone – over the last 30 days, it has risen 1.8 percent against the dollar.

Looking ahead, BofA Merrill Lynch’s Vamvakidis said that any move higher in the euro following a deal between Greece and its creditors would be short term. “If we see the euro well above 1.15 we would expect the ECB to react. The ECB wants a weaker euro, so for them a strong euro would be a tightening of monetary conditions – they would not allow it,” he told CNBC.

currency wed

Posted on 23rd June 2015 by barry norman in Stockpair Daily Insight

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A Deal In The Making

June 23, 2015

Barry Norman

greece has a deal

 

Greece’s economy minister has spelled out the terms of new proposals to end deadlock on its debt crisis, amid hopes a deal can now be struck this week. It includes new taxes on businesses and the wealthy, Giorgios Stathakis told the BBC in an exclusive interview. Eurozone finance ministers have welcomed the plan, saying there could be a deal “within days”. Mr Stathakis told the BBC’s Robert Peston he was confident Greece’s new proposals to balance the government’s books had broken the deadlock with its creditors.

He also said that the government had agreed with the IMF and Eurozone governments that the targeted budget surplus would be 1% of GDP or national income this year, 2% next year and 3% the year after.

currency monday

There will be no agreement with creditors to cut Greece’s massive burden of debt, despite Syriza’s earlier insistence on this. But Mr Stathakis told me he expects Eurozone government heads to issue a communique later saying that debt relief will be on the agenda for negotiation in coming months.

Greek PM Alexis Tsipras said he hoped Greece would “return to growth within the Eurozone”. But European ministers have said there is still no basis for making a decision for aid for Greece on Monday.

European equities closed sharply higher on Monday, as a deal between Greece and its creditors looked to be edging closer. It comes as crucial meetings of euro zone leaders and finance ministers to discuss new reforms offered by Greece to its creditors continued.

On Monday, major bourses reacted positively to a press conference by the head of the Eurogroup of euro zone finance ministers, Jeroen Dijsselbloem. He said the new Greek proposals were “broad and comprehensive,” and formed a basis to restart the talks. Dijsselbloem went on to add that he was hoping for a deal later this week.

The French CAC and the German DAX closed sharply higher, both up around 3.8 percent. The U.K. benchmark FTSE 100 index closed around 1.7 percent higher.

Posted on 22nd June 2015 by barry norman in Stockpair Daily Insight

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ECB Keeps Greek Banks Afloat

June 22, 2015

Barry Norman

monday forexwordsGreece’s crisis looks to be coming to ahead, however, with Prime Minister Alexi Tsipras in Russia to drum up support and cash for his beleaguered country. One suggestion was that he might even raid the country’s gold reserves to pay back €1.6bn due to the IMF at the end of the month. The European Central Bank pumped more emergency cash into Greek banks Friday, keeping them afloat while politicians try one last time to keep the country solvent. An ECB spokesman declined to comment. The EU has called an emergency summit of Eurozone leaders for Monday for urgent talks on the crisis. That will be preceded by one more round of talks among finance officials.

UBS suggests Europe will become more of a catalyst for gold price movements now that the June Fed meeting is out of the way. If Greece does default or leave the Eurozone, it potentially may give the market enough energy to break the upper end of the range. Without it, the broker sees gold stuck around $1,200 mark until the debate over US interest rates starts in earnest again ahead of the Fed’s meeting in September.

The euro bounced around this week but ended pretty much in its range in the upper 1.13 price level even though it did break 1.1485 briefly after the FOMC press conference. The Fed statement helped offset what would have been steep declines in the euro otherwise.  The dollar had been trading weakly since Wednesday, when Federal Reserve policymakers dulled expectations of imminent hikes in U.S. interest rates, but rose modestly on Friday.

currencies

Capital Economics also sees Greece as providing some impetus for metals and currencies this week. “In short, our view is that some form of Greek default is imminent – the debt burden is simply unsustainably high. Even if a short-term deal can be patched together next week, the inevitable would only be postponed.

“Admittedly, a Greek default on its own may not be a big deal: the sums involved are relatively small and the main creditors (official institutions) are known and have deep pockets. Indeed, it could be argued that any resolution – even a default – would at least lift the uncertainty.”

But it what happens to the Eurozone that is the worry. “Policy-makers had been telling us for years that euro membership is permanent, and then that any departure would be disastrous,” it says.

Posted on 20th June 2015 by barry norman in Stockpair weekly Insights

Major Economic Events for the week that you should be monitoring:

Cur. Event Actual Forecast Previous
Monday, June 22, 2015
Holiday China – Dragon Boat Festival
  USD Existing Home Sales 5.26M 5.04M
Tuesday, June 23, 2015
  CNY HSBC Manufacturing PMI 49.4 49.2
  EUR German Manufacturing PMI 51.3 51.1
  USD Core Durable Goods) 0.6% -0.2%
  USD New Home Sales 525K 517K
Wednesday, June 24, 2015
  EUR German Ifo Business 108.1 108.5
  USD GDP (QoQ) (Q1) -0.2% -0.7%

 

Global Exchanges

Chinese and Greek markets were on edge this week. China’s Shanghai Composite is now in correction territory after falling 13% over the past five trading sessions, as investors grow increasingly wary of what many analysts describe as a bubble.

The pain was most acute on Friday, when the Shanghai Composite shed more than 6%, with losses accelerating in afternoon trading. The Shenzhen Composite, which is heavy on tech stocks, dropped by the roughly the same amount.

The European Central Bank pumped more emergency cash into Greek banks Friday, keeping them afloat while politicians try one last time to keep the country solvent. An ECB spokesman declined to comment. But a Greek government minister was more forthcoming. “The ECB has responded to the country’s needs. The deposits are safe. This is good for the stability of the banking system,” minister of state Nikos Pappas told CNN.

US marketed closed lower Friday, but the Dow industrials and S&P 500 still notched a second straight week of gains.  The Dow Jones Industrial Average fell 101.56 points, or 0.6 per cent, to 18,014.28. The S&P 500 declined 11.48 points, or 0.5 per cent, to 2,109.76, and the Nasdaq Composite Index lost 15.95 points, or 0.3 per cent, to 5,117.00.

For the week, the Dow rose 0.6 per cent and the S&P 500 added 0.7 per cent. The Nasdaq gained 1.3 per cent in the same period, marking its first weekly gain in a month. A surge in biotechnology shares on Thursday propelled the NASDAQ to a record close, its first since late May.  Greece’s debt negotiations and updates on US monetary policy drove action in markets this week, rather than news about individual companies.

global equities stockpair

Currency Markets

The greenback tumbled against the euro and the yen this week as investors pushed back their expectations for higher U.S. borrowing costs and played down risks associated with the debt crisis in Greece. But major currencies remain in tight ranges due to the increased uncertainty over the Federal Reserve’s timeline for raising interest rates and over the negotiations between Greece and its creditors in Europe.

The dollar gave up 0.7% against the common currency over the past week’s five sessions, with one euro buying $1.1344. At the end of the week, the U.S. currency ticked 0.1% higher in late-afternoon trade. The greenback decreased 0.6% over the week against the Japanese currency to 122.70 yen, heading toward its lowest close since June 10. For Friday, the dollar slipped 0.2%.

global currencies

Commodity Markets

Precious metals’ trading was dominated by the two major ongoing sagas of Greece and US interest rates. The metal spiked on Wednesday after the US Federal Reserve was more conciliatory than expected at its latest monthly gathering. Though one interest rate hike looks certain this year, the possibility of two increases, which was being forecast by some economists, seems to have receded. Gold was trading at US$1,203, up US$25 on the week.

Crude oil fell about 2 percent on Friday, the first decline after three days of gains, as worries over the Greek fiscal crisis, weaker oil products prices and pre-weekend profit-taking undercut the market.

gold week

Posted on 19th June 2015 by barry norman in Stockpair Daily Insight

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Wall Street Soars

June 19, 2015

Barry Norman

 

yellenThe tech loaded Nasdaq Composite moved into record intraday highs, while the main indexes are on track to record their third consecutive advances. The Nasdaq gained 69 points, or 1.4% to 5,133.76, touching a record intraday high. The S&P 500 rose 20 points, or 1%, to 2,120 and it only about 10 points below its all-time closing high. The Dow soared 200 points, or 1.4%, to 18,134.

Investors continued to cheer what they perceived as a dovish tone set by the U.S. central bank and its Chairwoman Janet Yellen following the conclusion of a two-day Fed policy meeting ending Wednesday.

The dollar declined on Thursday, with weaker-than-forecast U.S. consumer inflation data making traders even more uncertain about when the Federal Reserve will launch interest rates hikes.

The dollar index was down 0.50 percent in a second day of losses since the Fed on Wednesday trimmed economic growth forecasts and gave no clear signal on when it will hike interest rates for the first time in nearly a decade. The dollar was last off against the euro by 0.55 percent at $1.14, a level not seen in a month.

Jumps in gasoline prices helped lift the U.S. Consumer Price Index 0.4 percent last month after it rose 0.1 percent in April, according to the Labor Department. But the rise was shy of forecasts.

consumer prices

The dollar climbed ahead of Wednesday’s Fed meeting. But the dollar gave back all those gains as investors viewed the Fed statement and remarks by Chairwoman Janet Yellen with a dovish cast. The Fed also lowered its interest-rate projections for the coming years.

gold quote