Morning Markets: Calling Greece's bluff
- Japan revised industrial production (0430 GMT, already published)
- Spanish CPI (0700 GMT)
- EU industrial production (0900 GMT)
- US PPI (1230 GMT)
- Uni of Michigan survey consumers (1400 GMT)
The niceties of the diplomatic circuit were summarily ditched overnight after Greek prime minister Alexis Tsipras was told in no uncertain terms by European president Donald Tusk that it has to stop fighting creditors' demands and sign a default-swerving deal to stave off a potential euro exit. The IMF grabbed its ball and left leaving no-one in doubt as to its position.
EURUSD was sliding into the morning session but still keeping its head above the 1.1200 mark. Any further damaging news out of Greece could see further slippage, notwithstanding an important EU industrial production print today. A relatively dollar-positive monthly US retail report yesterday after four of the previous five had missed has not had much impact but might boost expectations for a September rate hike.
Core bonds picked up some of the slack with German bunds ending four consecutive days of decline while US 10-year Treasuries held firm. Asian stocks were on the rise with the Shanghai Composite Index up 2.8% for the week with bonds through the region also on the rise as the outlook for a potential rate cut in September by the US Federal Reserve firmed. Expect stocks to rise again if speculation that the PBoC might take further stimulus action this weekend is borne out.
HSBC meanwhile fell 1% on the FTSE after it announced a global plan to cut 25,000 jobs, 8,000 of them in the UK. Although clearly a blow to prestige, GBP has held steady going into the European session.
- Hong Kong house prices rose the fastest of any country over the 12 months to March
- New lending to Australian business has risen to a nine-month high
- Rio Tinto will seek to raise $1.2 billion in a 10-year fixed rate issue
- Shanghai Composite Index up 0.6% on the day
EURUSD straddles have a mid. of 11.2%, coming off significantly from Thursday
Straddle remains high as the market waits on Greece
One-month USDJPY volatility moved sharply to the left in New York trading yesterday
Vols down to 9.15% from 10.3% in the pair
AUDNZD volatility coming off after RBNZ rate decision.
From the Floor
Walk-out. "It looks like the IMF has decided to call Greece's bluff," says Boye.
Return to go. "There was yet another failed attempt at $62/b yesterday for WTI in this ongoing yo-yo effect," says Hansen
Get all the latest from Saxo Bank's trading floors in From the Floor, within the hour.
While US producer prices show no sign of inflation, the Fed still looks like it will hike rates in September, no matter what, says Juhani Huopainen.
Bank of Japan chief Haruhiko Kuroda may have ruffled political feathers with his comments on JPY strength, but he was correct to do so, says Max McKegg.
EURUSD may have started the European day in tepid fashion but there is good reason for an intraday rebound towards and potentially past 1.1300, says Alan Collins [trade view]
Talking the talk
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Morning Markets goes out on the TradingFloor platform at 0700 GMT, Monday to Friday.
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