Greek talks gain pace as leaders meet

Thursday, June 04, 2015

Efforts to reach a deal after four months of negotiations gathered pace as Angela Merkel stepped in to help break the stalemate and Greek Prime Minister Alexis Tsipras continued to hold talks with eurozone officials in Brussels. While market participants are on the whole optimistic that a deal can be reached a cautionary note lingers in the air after Athens stated yesterday that they would hold off making the near $300mn loan repayment to the IMF if it wasn’t fully satisfied with any deal put forward by its creditors. The euro rallied strongly for a second session yesterday, trading around a two week high towards 1.1285 against the dollar with activity this morning seeing the single currency hold onto near term support around 1.1270 early on.

Sterling extended its bear run against the euro for the sixth straight session yesterday after comments from ECB President Mario Draghi during yesterday’s press conference outlined the positive outlook for the eurozone economy. Deflationary pressures were thankfully subsiding after Tuesday’s release of eurozone CPI data for May which estimated consumer prices increased by 0.3% y/y after remaining flat the previous month. The euro traded near a four week low against the pound, towards 1.3592 having gained almost 4% since May’s peak of 1.4173 as prospects for the eurozone and UK showed signs of divergence. The UK services PMI fell short of expectations, coming in at 56.5 in May against the median estimate of 59.2 as investors started to question the robustness of UK economic growth but investors are hopeful that details gleaned from today’s press release accompanying the Bank of England base rate decision will shed further light on the state of the economy.

Cocoa futures resumed their upward rally after Ghana revised its production forecasts lower from 850,000 tonnes to 750,000 tonnes for 2015. Second month ICE cocoa futures built on tentative support around $3,100/tonne as prices rallied towards $3,136/tonne before paring some of these early gains to end the day at $3,124/tonne. If the revised production estimates prove accurate it would signal a near 20% reduction from the previous year’s harvest as a combination of strong winds, sparse rainfall and a pullback in the government spraying programme contribute to a lower crop yield. 

EUR rebounds for second straight day

EUR Curncy Euro Spot Daily 04 2015 06 04 07 26 12

GBP suffers heavy losses against EUR 

GBPEUR Curncy GBP EUR X RATE 2015 06 04 07 34 45

Cocoa futures resume rally on fundamental outlook

CC2 Comdty Generic 2Nd CC Fut 2015 06 04 07 42 41

Events for today

0900

UK

May

New Car Registrations

1200

UK

May

BoE Rate

1230

US

May

Challenger Layoffs

1330

US

Q1

NF Prod. & Labour Costs

1330

US

w/e

Jobless Claims

1530

US

w/e

EIA Nat Gas

Topics: ECB, BoE, EUR, GBP, IMF, Cocoa
More from: Kash Kamal