Euro Finally Stalls, Greece Raises the Stakes
The euro squeeze hit 1.1380 before it finally stalled but then closed near the lows and continued down to 1.1214 in early Asia-Pacific trading. That came despite yet another compression in the spread of Treasuries over Bunds.
The catalyst for the most-recent 50 pips lower in EUR/USD has been increasing murmurs about trouble in Greece. As recently as yesterday, Greece had promised to pay a €312m loan due to the IMF on Friday. That changed late Thursday as Athens asked to skip the payment and instead pay at the end of the month.
What does it mean? It's beginning to look like a game of chicken. Greece may be saying that it will preserve what's left of its war chest if talks don't improve and default. An unnamed EU official cited by Reuters afterwards said it was “not a good sign” and that “it will be difficult from here”. That leaves the euro in a vulnerable place.
The day ahead will be massive in terms of news and data. Not only are EU leaders meeting (without Greece) in Berlin, but the OPEC decision is also due along with US and Canadian jobs reports.Market participants will have a chance to digest and prepare during a relatively light Asia-Pacific session. The highlights are The Australian AiG performance of construction index and Japanese leading indicators but both rarely move markets.
|Leading Economic Index (APR) [P]|
|106||Jun 05 5:00|
|AiG Performance of Construction Index (MAY)|
|47||Jun 04 23:30|
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