Intraday Market Thoughts

Greece Passes Austerity, Athens Burns, PSI Unclear

by Patrik Urban
Feb 13, 2012 12:29

EUR is stronger after Greek parliament approves austerity; German WPI rose in January; Swiss PPI unchanged. Italian auction results in lower yield, German auction in higher yield. OECD sees positive change in momentum. Monday's Premium Intermarket Insights are due after the London Close.

The greenback is slightly weaker against all majors in the ongoing session. European equities are gaining between 0.5% and 0.9%. The relative strength winner is AUD followed by NZD.

Euro firmed along with other majors against the USD after the Greek parliament approved a new set of austerity measures that assured a ratification of the EUR 130 bln of financial aid. The ratification is likely to be completed at Eurozone finance ministers meeting on Wednesday. However, Greece will stay on traders' radars as the involvement of the private sector negotiations have not been concluded yet. EURUSD has not had any follow through and trades around 1.3250

European data calendar was short today as it had only two items. German wholesale prices that rose in January 1.2% from 0% m/m leaving the annual print steady at 3% and Swiss producer and import prices that were unchanged m/m and declined to 2.4% from 2.3% y/y.

Italy reached a full take up as it sold EUR 12 bln worth of two bonds today. The larger auction was for 2014 BOT and reached EUR 8.5 bln. The average yield declined to 2.23% from 2.735% but bid to cover fell to 1.09 from 1.47.

German auction resulted in higher yield at 0.076% from previous -0.012% and lower cover at 1.5 from 1.8. Germany sold EUR 3.01 bln vs EUR 4 bln target.

The OECD said today that composite leading indicators point to a positive change in momentum for the whole OECD driven primarily by the US and Japan while growth in the Eurozone is still sub-par. China's indicator points more strongly towards a slowdown.

ECB deposits crossed again the half a trillion mark as they rose on Friday to EUR 507.87 bln.

There are no reports due during the US session today.


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