There’s been an intriguing twist in the ongoing Greek drama: Prime Minister Tsipras arrived in Moscow this morning (8 April) for talks with Russia’s President Putin that the Greeks have described as “politically friendly and economically promising.” Undoubtedly this will stir up some reaction in Germany in the coming session.
It’s still unclear whether Greece has sufficient funding to cover its upcoming €458 million International Monetary Fund loan repayment on Thursday (9 April). The media have produced mixed reports from Greek officials for market commentators to digest, leaving the market sceptical of a positive resolution to the situation.
Sterling vs Greenback
Sterling has been supported by recent Purchasing Managers Indices (PMIs), but the Bank of England has voiced some concerns for the pound.
The British Composite PMI reading for March jumped sharply to a seven-month high. Because the British economy is one of the strongest in the developed world and the central bank is still in second place for returning to rate rises (early spring 2016), data like this could reverse the pound’s ten-month decline against the Greenback. However, investors refuse to pay the Bank of England as much hawkish speculation as they do the US Federal Reserve, while the Bank of England has reiterated its warning of global financial risks.
The Greenback was sold off heavily in the Friday afternoon session (3 April) following the sharp miss on the US jobs number. However, it appears low liquidity holiday settings are the best time to receive bad news. Subsequently, last week’s horrid tumble pushed the dollar down to disconcerting levels – a nine-month channel floor for the US dollar, 1.1000 for EURUSD and 1.5000 for GBPUSD among others – though the currency has now fought its way to a modest recovery.
It is just enough of a bounce for the benchmark to move bulls away from the ledge, but not enough to suggest they will be unhindered in a return to 11-year highs.
