Greek Parliament Says Yes (Again)
In yet another midnight vote, the Greek parliament approved the 2013 budget by a majority of 167 votes to 128, but EURUSD was little changed. So far, at the time of writing at least, there have been no post-vote party expulsions which keeps the government’s fragile majority intact. The positive outcome clears another hurdle to eventual disbursement of the next tranche of external aid, but it seems unlikely that Eurozone finance ministers (who meet later on Monday) will be ready to approve the release of the cash so soon. Nevertheless we do expect to hear progress on this front over the coming days – after all, a EUR 5bn Greek bond is due to mature on Friday which should help concentrate minds and inject a dose of urgency. In any event, it seems very unlikely that a default will be allowed to occur given the maturing bond is held by the ECB and Greece is already scheduled to issue a total of EUR 3.125 bn in 1m and 3m T-bills on Tuesday to help raise most of the required cash. Over the weekend, China’s trade balance for October beat consensus estimates, boosted by accelerating export growth. We would caution against buying AUDUSD on the back of this release however given the detail was far less encouraging. The value of iron ore imports fell 21% m/m and has dropped back to levels unseen since Feb 2010. This keeps us long-term bearish on the Australian dollar but we are patient – our downside AUDUSD option trade recommendation still has four months to run to expiry. Today, one of the few Japanese data releases with the capacity to move USDJPY is due – and our Japan economists think Q3 GDP will be marginally stronger than expected.
Click here to read the full report: UBS Morning Adviser Asia
UBS Investment Bank