ECB reaffirms commitment to support Greece

Friday, July 17, 2015

ECB President Mario Draghi reassured markets as he announced an increase of emergency liquidity assistance to Greek financial institutions limit by €900m, much to the surprise of market participants who had expected the central bank to maintain its emergency funding cap at €89bn. Leaving the benchmark interest rate unchanged at 0.05% Mr Draghi took the subsequent press conference as an opportunity to bolster confidence in the eurozone after a volatile few weeks, offering further details regarding the ECB’s outlook on Greece. Indicating the central bank’s continued commitment to support the indebted nation Mr Draghi stated that policymakers had been operating under “the assumption that Greece will remain a member of the euro area” and that “there was never a question” of a Greek exit.

The euro traded back towards a six week low on Mr Draghi’s comments as contagion fears subsided and investor attention switched back towards the ongoing QE programme. Trading towards 1.0855 against the dollar yesterday the weakness in the single currency highlighted the diverging monetary policies of the eurozone and the US, with US Federal Reserve Chair Janet Yellen reaffirming their commitment to raise benchmark rates over the coming months. Many analysts expect the US to raise interest rates as early as September and as policy tightens we could see further dollar strength against the euro, pushing towards parity. Activity this morning has seen the euro stabilise around 1.0890 early on, taking a brief pause having lost over 2% against the greenback so far this week.

Asian equity markets ended the week on a positive note as major indices across the region posted gains overnight with Chinese mainland stock indices leading the charge higher. The bullish undertones managed to carry over to the European session, as stock benchmarks across the region looked to add an eighth successive session of gains. Abating Greek concerns and a stabilising Chinese equity market shored up support for global equities and we could see risk appetite steadily improve on today’s release of US economic data, notably housing starts, building permits and CPI for June as well as the University of Michigan sentiment index for July.  

EUR swings lower as fundamentals take driving seat

EUR Curncy Euro Spot Daily 17 2015 07 17 08 07 32

Events for today

1000

EZ

May

Construction Output

1330

US

Jun

Housing starts

1330

US

Jun

CPI

1330

US

Jun

Building Permits

1500

US

Jul

University of Michigan Survey

LT: 

Aug  Crude WTI (NYMEX)

OE: 

Jul  FTSE 100 Index & Equity (LIFFE) 

 

 

 

 

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