Could the trust in a Greek deal involve too much risk?

Apr 17, 9:36 am
Market news

Markets were again the subject of movements that change the long-term trajectories which were previously set. The Swiss National Bank decided on Wednesday to drastically reduce the number of institutions exempt from negative rates on their cash deposits held at the central bank. Negative interest will now be applied to sight deposit accounts held at the SNB by enterprises associated with the Confederation, the Federal Pension Fund, and the SNB’s pension fund.

The Swiss franc depreciated that day, managing to offer some space to the currency pairs which were depreciating in front of the franc. This episode was a short one as EURCHF is already testing the 1.0330 support level and USDCHF, having even a more bearish path, is currently trading in the 0.9570 area. Both the Euro and the American dollar have lost their strength in recent days while the Swiss franc is well responding as a safe haven asset.

Talking about the American dollar, recent data have seriously paused the ascending trend. Consumer Confidence fell to -5 points, Unemployment Claims rose to 295k, Flash Manufacturing PMI decreased to 54.2 points and New Home Sales also fell to 481k. Market participants are trying to maintain their optimism, keeping hope for a Fed’s hawkish discourse delivered as soon as possible. The Federal Reserve holds a policy meeting on April 28 and 29 and for sure the dollar is likely to face the pressure of the debate on when interest rates should start to rise.

The Euro zone is facing a period of poor macroeconomic data. Yesterday, all the manufacturing and services PMIs for Germany, France and the Euro zone were published below expectations. And yet the EURUSD is above the 1.0800 resistance level. The Greece situation is again leading the euro. As today the Greek officials are due to meet the international creditors, hopes increased about obtaining an agreement. German Chancellor Angela Merkel said “everything must be done to prevent Greece from running out of money” while Greek Prime Minister Alexis Tsipras also said he was optimistic about getting a deal which will keep its country within the boundaries of the Euro zone, while managing to pay all debts on time.

The euro could keep its enthusiasm until Eurogroup Meetings will release the first results of the negotiations. Watch out for a new possible failure of talks, which may be the most realistic scenario and also the truth that the market participants don’t want to hear.

Oil quotations are again advancing as the air strikes in Yemen were resumed and the security of Middle East oil shipments is again in danger. If the situation doesn’t calm down, both the Brent and WTI oil may reach new local highs.

The British pound has faced some weak macroeconomic data (Retail Sales down to -0.5%), but the hawkish message of the monetary policy minutes has been pushing the GBPUSD above the 1.5000. Considering also the temporary weakness of dollar, the GBPUSD is managing to defeat, for the moment, the pressure of the coming elections.

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