• EUR remains choppy on lack of clarity over Greece
• GBP may be a safer sell than EUR, vs. NOK or AUD
• Japan trade data less bad – bias remains to the downside for USDJPY.
Markets stay unsettled and illiquid as clarity surrounding the Greece crisis remains elusive. A lack of news yesterday allowed some respite but risk continues to be vulnerable to incoming headlines and rumours; Asian markets have reversed yesterday’s moves and once again threaten a break lower in risk.
Press reports say that the Greek privatisation programme might be entrusted to an international agency, presumably as a means of reassuring creditors that the asset sales will proceed. Indeed Finland is said to be proposing that the assets be transferred to a fund to be held as collateral against further loans. While this provides further support to our view that Greece will eventually get the cash it needs, the conditions on the Greek bailout are clearly growing ever more onerous. The Greek opposition has refused to play ball; balking at further tax increases. But EU support for a package is said to be contingent on broad Greek political support, presumably on fears that a change in government might derail any deal. Thus while we continue to see a market- and Euro-friendly outcome as the most likely, political risks leading to a EURUSD breakdown are still very real.
BNP Paribas
Corporate & Investment Banking