Greece to present new proposal to Eurogroup meeting today

Tuesday, July 07, 2015

All eyes are on the Eurogroup’s meeting this evening, as Greek Prime Minister Alexis Tsipras and the new Finance Minister Tsakalotos are meeting European creditors to discuss a fresh bailout proposal and possibly secure an agreement. In the meantime, the ECB added further pressure to the Greek banking sector as it kept the ELA funding limit unchanged while Greek calls for a possible increase were denied. The ECB increased the haircut in acceptable collateral which will tighten Greek bank liquidity even further in the short-term.

There are increasing concerns that the recent uncertainty over the Greek debt crisis and renewed worries surrounding the Chinese outlook could defer the US Federal Reserve from increasing US interest rates at the September meeting. However, the USD Index remains strong, trading above 96.0 against a basket of currencies.  

Germany’s industrial production was flat (0.0%) m/m in May compared to a 0.9% rise in April, missing analysts’ expectations of a 0.1% rise. France’s trade balance was reported at -4.020 mln in May compared to -3.008 in April. The euro extended recent losses towards 1.10 against the USD, but held within the recent range of 1.09-1.11. European equity markets rebounded in early trade this morning as the DAX, CAC, IBEX and London equity benchmark indices gained between 0.15% and 0.45%.   

Today, the main focus will turn to the release of the US trade balance and IBD economic optimism data as well as UK industrial and manufacturing production figures and NIESR GDP estimate. Sterling rebounded strongly yesterday and climbed above 1.56 against the USD, showing strong upside momentum. This morning, GBP has been hovering around 1.5560 against the USD in early trade. Furthermore, sterling reached a high at 1.4173 against the euro yesterday to end the session at 1.4114. This morning, GBPEUR has been trading sideways around 1.4100.

Crude oil prices plunged yesterday as Greek uncertainty and worries over a slowdown of the Chinese economy weighed on market sentiment. We experienced a heavy sell-off in the market as WTI front month futures retreated over 7% to close at 52.53 per barrel. Brent front month futures declined nearly $4 to end the trading session at $56.54 per barrel. This morning, crude oil prices edged slightly higher within the recent range, while investors continue to remain cautious over today’s deadline of Iran’s nuclear programme agreement.    

Brent front month futures

COQ5 Comdty (BRENT CRUDE FUTR  A 2015-07-07 09-00-24 

WTI front month futures

 CLQ5 Comdty (WTI CRUDE FUTURE  A 2015-07-07 09-01-43

Events for today:

0700

DE

May

Industrial Production

0930

UK

May

Industrial Production

1330

US

May

Trade Balance

1500

US

Jul

IBD Sentiment

1500

UK

Jun

NIESR GDP Estimate

2000

US

May

Consumer Credit

 

All times UK Local Time

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