Kicking The Can Down The Road
Good Monday morning. As ever, Greece hogs the headlines today as it reached an eleventh hour accord with the Eurozone to stay a part of the Euro for the time being. What has been agreed, so far, is hardly ground-breaking stuff as it is merely a four month extension for their bailout programme. This has been interpreted by some as an agreement to kick the can down the road for a further fourth months. This has all been about posturing and it looks like Syriza showed their hand before the ECB. This is possibly due to estimates that €100bn has been withdrawn from Greek banks in the last three months.
Today, PM Tsipras and FM Varoufakis have to present a list of reforms to Eurozone finance ministers in order to get the extension passed. So, it looks like not a great deal has changed but it gives all parties a bit more breathing space and maybe a couple of months when the “Grexit” isn’t the all-consuming all-appearing headline of all financial news.
Most currencies have been caught in the headspin of the Greek situation, especially the Pound. Whilst GBP has strengthened consistently over the last month, we did stutter a bit on Friday as markets waited to see what happened. Despite being outside the single currency, 48% of UK exports head to the Eurozone, so its financial health is very important.
We may be able to see markets look at financial data a bit more now and whilst today is relatively quiet, with just IFO figures from Germany and home sales from the US, the rest of the week is much more interesting with Janet Yellen speaking and Mark Carney addressing the Parliamentary Treasury Committee.