Daily Market Report - 30/04/2015

Greece is contemplating disposing of its 51% stake in Pireaus and Thessaloniki port as part of a possible deal with creditors according to government sources. Talks between Greece and the Eurogroup are ongoing, with Bloomberg reporting yesterday that a deal between Greece and the Eurogroup is expected to be reached by Sunday.

Moody’s also downgraded Greece from Caa1 to Caa2 with a negative outlook and the ECB also announced that they will increase their Emergency Liquidity Assistance (ELA) funding to Greek banks to EUR76.9bn, an increase of EUR1.4bn.

EU Consumer confidence came out in line with expectation at -4.6 German CPI figures were all in line with expectation, and although the MoM figure showed Germany entering a period of deflation, this was a result of a downward trend in energy markets and not necessarily a true reflection of the economy.

Yesterday saw an incredibly disappointed GDP figure from the US, with the QoQ growth coming in at 0.2% against a 1.1% consensus which was the lowest growth figure since June 2014. Treasuries and US equities both initially saw a knee-jerk reaction however the moves were not sustained as the statement did not hint at a change in policy stance.

In a statement from the FOMC yesterday, they announced that the lack of growth is not a cause for concern. Extreme winter weather, strong dollar and collapsing oil prices that have stalled the US energy boom contributed to the slowdown. The US central bank has indicated it will raise rates soon, as long as the US economy continued to grow, but the timing of the increase remains uncertain. The Fed also decided to remove any specific references to calendar dates when discussing the timing of a rate rise, which could further confuse markets, who have often reacted badly to any hint of the end of cheap money in the US economy. However, the sluggish growth figures suggest that that rate rise will not occur at the central bank's June meeting. Many analysts are now eyeing September instead. Whilst growth and employment had slowed, officials said that they expected a return to modest pace of growth and that the job market would continue to improve. However as the growth figures were such a disappointment, this caused severe weakness of the USD pushing both GBP/USD and EUR/USD to two month highs. The fed also kept interest rates unchanged at 0.25%.

Key Announcements
9:00   – EUR – German Unemployment Rate – expected to remain unchanged at 6.4%
9:00   – EUR – German Unemployment Change – expected to show a decrease of -13k against -14k previous
10:00 – EUR – Eurozone Consumer Price Index – expected to increase from -0.1% to 0%
10:00 – EUR – Eurozone Consumer Price Index (Core) – expected to remain unchanged at 0.6%
13:30 - US - Unemployment claims

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