European GDP today but markets still focused on Greece

9 June, 2015

Tom Arnold

After a relatively quiet start to the week yesterday data-wise, and only really the end of the G7 meeting with its associated press conferences to digest, it became clear that the markets remain very focused on Greece and the debt negotiations with the Troika. The negotiations are still very much in the balance, with recent optimism over a quick resolution having faded, but the markets rarely lie and the Euro has pushed back significantly against both the Pound and the Dollar so maybe some cause for optimism is still in place.

The current discussions are focusing on trying to extend the current terms of repayment out to March 2016, and the feeling is that this will be widely accepted. Ironically it is possible the sticking point will actually be getting the proposal past the Greek parliament – while the breathing space of a few more months is definitely attractive, having the Troika so intrinsically tied into the country’s finances for that time is not, with some hardliners still hanging on to the idea that the debt can be scrapped and therefore the Troika removed from the equation.

Whichever way it goes what is apparent is that positivity towards a resolution produces Euro strength, which is great if you have Euros to sell, but not so good if you have Euros to buy.

Today the markets don’t have a huge amount to focus on either, with UK trade balance and European GDP the only real releases of note. The UK trade balance figure is expected to slightly narrow and GDP is expected to remain the same, so the only real market impact will come if we get any variance from those expectations. There has already been one data release of note this morning with Swiss unemployment out earlier – no change though has caused very little movement bar a brief spike for those with a CHF requirement.

As ever make sure you stay in close contact with your CI account manager to be kept informed of exactly what is happening and what impact the market’s moves are having on your upcoming requirement and remember; with the Euro likely to strengthen, if you do have Euros to buy it might be worth looking to lock in the rate with a forward contract before it gets any worse.