EU leaders meet for crisis talks

Friday, June 19, 2015

EU leaders have been requested to attend an emergency summit in Brussels as the final push to avoid a Greek default gathered pace. European Council President Donald Tusk called the meeting of eurozone leaders, bypassing monitors and finance ministers as it became apparent that the stalemate that has gone on for the last few months would require the intervention of higher powers. Germany and the IMF have become increasingly vocal in recent weeks, stating that the ball is firmly in Greece’s court, however, every deal that has been presented has been more or less an ultimatum. This take it or leave it attitude hasn’t resonated well with Greek PM Alexis Tsipras and with political leaders now formally stepping in to negotiations and the urgency to reach a deal before the end of the month the mood, while far from bullish, may just begin turning slightly less bearish.

The euro strengthened for a second day on hopes of a deal with gains throughout the day reaching a fresh one month high against the dollar yesterday, reaching 1.1436 before paring some of these early gains and ending the session  at 1.1359. The single currency has tested near term levels on the upside in recent sessions after spending much of June consolidating broadly between 1.1190-1.130. Jeroen Dijsselbloem, the Dutch finance minister who chaired a gathering in Luxembourg yesterday commented that the recent delays could mean that a further extension of the programme into July may be warranted the third extension in six months as the likelihood of a disbursement of emergency funds even if a deal was reached before the end of the month was slim and with a €1.5bn loan repayment due to the IMF by the end of June we could once again see an extension kicking the can further down the road.

Chinese stocks experienced their worst week since the financial crisis as investors finally began to question whether the rally in equity markets that has seen substantial double digit growth since the start of the year is justified. Ongoing support from policymakers in Beijing and from central bankers at the PBOC had seen the Shanghai Composite rally a massive 65% since the start of the year while the CSI 300 trailed behind adding a “modest” 57% since the first of January. However, this week has seen significant selling across both indices with both indices losing 13% as investors grew increasingly concerned of an equity market bubble.

EUR steadies on hopes of a new deal

EUR Curncy Euro Spot Daily 19 2015 06 19 07 46 38

Shanghai Composite sells off on bubble concerns

SHCOMP Index Shanghai Stock Exc 2015 06 19 08 08 44

Events for today

0700

DE

May

PPI

0900

EZ

Apr

Current Accounts

0930

UK

May

PSNCR & PSNB

LT: 

Jul  Crude WTI (NYMEX) 

OE: 

Feb  FTSE 100 Index & Equity (LIFFE)  

Topics: EUR, IMF, Greece
More from: Kash Kamal