FXStreet (Bali) – David Fritz, Global Markets Strategist at Nomura, breaks down the key events for the week ahead, noting that this week the focus will be on Greece, with a Eurozone summit on Monday to find a solution.
Key Quotes
“The Eurogroup negotiations yielded no deal this past Thursday, as widely expected, and our base case remains that there will be some form of capital controls implemented in the next few days. EU president Tusk called for a eurozone summit on Monday to try to resolve the situation. The meeting of the Eurozone’s 19 leaders will start at 18:00 BST.”
“Crunch time for Greece is fast approaching as its Euro area-backed bailout extension expires June 30, at which time it also has EUR1.5bn due to the IMF. Eurogroup president Dijsselbloem has made comments saying that Greece is moving in the direction of a Eurozone exit and that it is unthinkable for Greece to get aid by June 30, but both sides have expressed their desire for a deal and for Greece to stay in the Eurozone.”
“There will also be a few important data points in the coming week. PMIs for the Eurozone will be released on Tuesday. This will be followed by German IFO on Wednesday. These data points could confirm whether economic momentum in the eurozone is indeed slowing.”
“In the US, we will get the final estimate of Q1 GDP for the US. Incoming data since the second estimate of Q1 GDP suggest that growth declined by 0.4% in Q1, a slight upgrade from the previously reported decline of 0.7%, but lower than the -0.2% expected by the markets. Durable goods orders on the other hand are forecast to not have decreased as much in May as the market expects (-0.2% compared to -0.5%). We have already taken off our spot USD long trades, and are now neutral on USD in our model portfolio, but will continue monitoring data such as GDP and durable goods for signs of improving conditions in order to reengage in USD longs.”
“In Japan, the inflation data will be released on Friday. Our economists expect only a 0.1% increase in core CPI. Going forward, our Japanese economists expect core CPI to decline to -0.2% y-o-y in July-September 2015. While a negative inflation rate by itself is not enough to trigger additional BOJ easing, Nomura believes that it will have to consider easing if inflation expectations fall substantially.”
(Market News Provided by FXstreet)