Inspectors from the European Commission, the ECB and the IMF arrived at Athens yesterday to assess Greek debt-sustainability and although the analysis will be completed next month, the conclusions were already becoming clear. Greece will probably not be able to face its obligations and more debt restructuring is likely to be necessary, according to three EU officials.
This means a restructuring of around €200 billion of Greek government debt held by the ECB and Eurozone governments will be needed to put the country back on a sustainable footing. The question on everyone’s lips is will Europe continue to throw money at Greece?
Markets awaited Q2 GDP data from the United Kingdom today. The GDP data was expected to show the British economy shrank 0.2% in the three months to June from the same period last year, however the decline was far worse than predicted at -0.7%, causing the GBP to drop against all majors. This confirms that the UK economy contracted for a third consecutive quarter and it is now the longest recession since the World War2.
Also of interest, Credit Agricol released a report that suggests that the Pound may be slowly losing it semi-safe haven status. This is mainly due to our ever increasing debt and the inability to meet targets of reducing it... Of course this is currently being overshadowed by the increasing problems in Europe!
US will today release the New Home Sales June report and after two months of recovery, the market is expecting a third increase. Moreover, with the share of foreclosures continuing to decline, home prices have also improved over the last year. Despite the pullback in existing home sales in June, we suspect new home sales likely increased on the month," concludes Wells Fargo. "We still expect the housing recovery to be slow, however."
08.00 EUR German IFO - Business Climate (Jul) - Measures an early indicator of current conditions and business expectations. This is predicated to fall from the previous level 105.3 a negative for EUR. IFO Current Assessment (Jul) and Expectations (Jul) are also expected to fall from previous levels 113.9 and 97.3, both negatives for EUR.
08.30 GBP UK Gross Domestic Product (QoQ) (Q2) – UK GDP falls by 0.7% causing the Pound to fall aggressively
14.00 USD United States New Home Sales (MoM) (Jun) – This is predicted to increase from the previous position of 0.36M a positive for the dollar.
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