Greece defers IMF payment

Friday, June 05, 2015

Greece has become the first country to defer payment to the IMF since the 80’s as talks between Athens and its creditors this week failed to reach an agreement. PM Alexis Tsipras is due to present the list of demands put forth by lenders to parliaments today and while it looked as if progress was slowly being made this past week, as Angela Merkel intensified efforts in the hopes of reaching a deal, it seems as if we are no closer to a conclusion. The delay in repaying the near €300m IMF loan comes as Greek officials deemed the fresh terms as too harsh and further increases the risk of a Greek exit from the euro as the threat of default rises.

After spiking towards a three week high of 1.1380 yesterday, the euro promptly gave back these early gains and slid towards 1.1223 against the dollar. Activity this morning has seen moves extend on the downside towards 1.1180 and we anticipate further downside for the euro against the dollar as negotiations are once again drawn out. Provided any positive surprise to US macro data today, we could see the dollar recover additional ground against the single currency, potentially pushing it back towards 1.1000. 

The IMF has suggested the US Fed should postpone a rates rise to at least H1 2016 as it cut its US economic growth forecast for the second time this year. Given its near 20% rally against a basket of major currencies over the past twelve months the IMF mused that the dollar was “moderately overvalued” and that further gains would have a negative impact on economic growth. The organisation cut the growth forecast for the US from 3.1% to 2.5% for 2015 while its 2016 GDP growth forecast was also tempered from 3.1% to 3%. The S&P 500 slipped to a one month low yesterday on the revised outlook, erasing 0.78% throughout the day as it pared the week’s modest gains ahead of today’s non-farm payrolls data.  

EUR halts rally and reverses after Greece defers IMF payment

EUR Curncy Euro Spot 2015 06 05 07 49 24

S&P 500 drops to one month low ahead of NF payrolls

SPX Index SP 500 Index 2015 06 05 08 06 37

Events for today

0600

JP

Apr

Leading Index

0700

DE

Apr

Factory Orders

0930

UK

May

BoE/GfK Inflation Report

1000

EZ

Q1

GDP

1330

US

May

NF Payrolls & Unemployment

2000

US

Apr

Consumer Credit

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