Greece is radically changing its attitude

Jul 10, 8:14 am
Market news

Surprisingly enough, Greece’s position towards the reform package has changed radically. The Greek government sent a package of reform proposals to its euro zone creditors on Thursday, asking for 53.5 billion euros, a review of primary surplus targets and “reprofiling” the country’s long-term debt, while seeking a parliamentary vote on today to endorse immediate actions. In return, it looks like Greece is willing to accept even heavier reforms than previous imposed by Europeans, which would include: defense spending cuts, a firm timetable for privatizing state assets such as Piraeus port and regional airports, hikes in VAT for hotels and restaurants and slashing a top-up payment for poorer pensioners. The European officials won’t comment until the documents are assessed by the European Commission, ECB and IMF.

EURUSD resumed its upward trend as the quotation is currently situated above 1.1095. If it exceeds 1.1120 there is a possibility to look further to 1.1150 and 1.1200. The German index DAX had a positive session yesterday, but the rally was stoped in the 11000 area. A possible close above this level could ensure the advance of the price up to 11160 points. If instead the prices fall below 10900, then the situation risks to become negative and the price may fall to 10870 and 10850 points.

Corrections are still possible on the European capital and fx markets as there are still contradictory opinions concerning the treatment on Greece. Thereby, after Angela Merket ruled out any cancellation of Greece’s debt and said the country has already received substantial cuts from banks and creditors, later the German Finance Minister Wolfgang Schaeuble said that the possibility of some kind of debt relief for Greece will be discussed over the coming days.

The capital market in China may show signs of recover as the likelihood of a rapid recover is rising for technical reasons (we may see also the rising price of gold and oil). The movement may lead the prices higher (although the recent local minimum might not be the last), but most likely, the Chinese economy would be a source of real adjustments which are even wider than we got used, with direct results not only in the local equity market.

The price of oil seems ready to recover the losses (for the WTI H4 graph we may follow the possible formation of a Double Bottom) as the situation in Greece promises to get better. The American oil inventories, together with the stocks of gasoline and distillate products, were reported higher that expected, but the prices didn’t care much. Moreover, the Iran’s nuclear program negotiations are almost finished and the price may consider this factor only after the Greek situation gets an outcome. Until then, the tendency may be positive.

Yesterday the British official bank rate was kept at 0.50%, while the asset purchase facility program was also maintained at 375 million. The British pound managed to appreciate, but the movements were not spectacular. GBPUSD is situated below 1.5411, while a breakout may confirm a Double Bottom pattern which would help the price advance up to 1.5465 and 1.5490.

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