How much does Greece really owe?
With no less than 12 individual measures of UK inflation being released at 9.30am this morning, GBPs direction for the day will be established early. Recent inflation measures have disappointed the market which likes to see a figure closer to 2% (rather than -0.1% we saw from one of the last readings). Given the trend of inflation data we are therefore unlikely to see anything that supports GBP this morning.There are very few other data releases of note today, from a data point of view the market is very much focussing on tomorrow evening’s US FOMC meeting, which will give us a clue as to future interest rate levels from the world’s biggest economy and the world’s reserve currency.
The Greek PM Tsipras addresses Syriza lawmakers today at 11am – whilst this does not constitute an economic data release the markets will pour over the statements and reactions to further judge Greece’s resolve. This is likely to give way to further Euro weakness if anything material is said.
Although headlines are focussing on the €1.5bn owed to the IMF this month, the figure is only a fraction of Greece’s overall repayment commitments; the below graphic gives more perspective on Greece’s wider commitments.
Infographic taken from BBC.
Market rumours are now discussing the possibility of a Greece default without leaving the Euro. This is something that has previously been considered unlikely, as, with any situation where contagion is a concern, isolation and or amputation are considered the most effective solutions. The price of the Euro could well rebound if it were to release itself of the burden of the Greek crisis but to allow it to linger will surely weaken it further, if not materially undermine it.