Daily Market Analysis – 04th June, 2015
By FxGrow Research & Analysis Team
Greek deal hopes and Euro zone debt yields lift Euro
Greek Prime Minister Alexis Tsipras said after talking with the senior EU officials that Greece was close to a deal with its creditors and it would make a payment due to the IMF on Friday.
"It was a good, constructive meeting. Progress was made in understanding each other's positions on the basis of various proposals. It was agreed that they will meet again. Intense work will continue." - Statement given by the European Commission.
Greece has enough cash to repay a €300 million payment due to the IMF on Friday.
German 10-year bond yields climbed to 0.887 percent, after the ECB raised its inflation forecast for the year 2015.
The 10 year US Treasury yields reached at 2.3696% the highest level since Nov 2014.
"The biggest positive about the bond market weakness is that yields’ going higher is a net positive for all of the financials. Higher yields on fixed income translate into higher rates and that increases the net interest margin for financials," - Michael James, MD Wedbush Securities, Los Angeles.
EURUSD is trading at 1.1345 in the European trading session having touched a high of 1.1378
European Central Bank kept its benchmark rates unchanged at 0.05 percent and increased its forecast for inflation in the Eurozone this year to 0.3 percent.
ECB President said bond buying program of 60 billion euros per month will continue till September 2016 with an aim to inject liquidity into the financial system and drive up the Eurozone’s low rate of inflation.
Draghi said "The full implementation of all our monetary policy measures will provide the necessary support to the euro area's economy."
On Greek Debt deal Draghi called for a strong agreement between Greece and its Creditors saying "A strong agreement is one that produces growth, that has social fairness but that is also fiscally sustainable and addresses the remaining sources or factors of financial instability in the financial sector."
In China HSBC PMI climbed to 53.5 the highest level in 8 months as growth remains sluggish in China.
"Overall, growth momentum in China appears relatively weak, weighed down by an ongoing deterioration in manufacturing operating conditions" - Annabel Fiddes, economist at Markit.
In UK the services PMI declined to 56.5 in May, while the UK's economy grew by 0.3% in the first quarter of the year. The UK service sector forms a large part of the economy.
"Additionally, construction firms in UK experienced an upturn in new business growth from April's near two-year low and job creation was the fastest recorded so far in 2015" - Tim Moore, Markit.
Crude Oil is trading lower at $59.56 after Russian Energy Minister's confirmation that the OPEC would not cut output at Friday's meeting.
Gold is trading lower in the Asia at 1182.65 while Silver is flat at 16.46
04th June 2015 – 09:30hrs GMT
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