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Greek bailout talks break down

Greek bailout talks break down

Sunday’s discussions crumbled apparently after just 45 minutes!

We therefore find ourselves on the ‘last chance’ merry-go-round for Greece…again. After yesterday’s talks ended the focus falls now onto Thursday’s meeting of Eurozone finance ministers. Given that any deal agreed at EU level must then be ratified by the Greek parliament, this meeting really could be a final opportunity before Greece are due to make a €1.6 Billion payment to the International Monetary Fund (IMF) on June 30th.

Despite some early morning movement in GBP/EUR, the reaction to the failed talks does seem to be somewhat muted, perhaps this demonstrates a degree of apathy for the situation now.

The ECB also meet the day before for a non-monetary policy meeting where the issue of ELA (emergency liquidity assistance) for Greece is likely to be discussed. Such measures are effectively keeping the Greek banking sector afloat. But the ECB faces the balance between liquidity and solvency, and the latter is increasingly being brought into question as a deal to keep the country solvent looks ever more elusive.

At 2pm today, ECB President Draghi speaks to the European Parliament, although this is not directly about the Greek crisis, there is sure to be some heavy questioning over the situation.

Given that the UK economic calendar has no significant data releases scheduled for today, a good proportion of movement in GBP/USD will be focussed on the US industrial production data due for release around 2pm. Of course, the pair is likely to be influenced by movement in EUR amid the Greek crisis; the logic being that if there is a EUR sell off then the money will predominantly move to USD thus bring GBP/USD down a fraction.

This week is likely crucial for USD with the Federal Open Market Committee meeting (including new forecasts and Chairman Yellen’s press conference) on Wednesday evening /Thursday morning.

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