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19 May 2015
Greek headlines still downplay deadlines – TDS
FXStreet (Barcelona) - Richard Kelly, Head of Global Strategy at TD Securities, gives an update regarding the key developments surrounding the Greece deal, further viewing that there is a high probability for Greece to procure short-term bridge financing, but no signs of a deal yet.
Key Quotes
“We can heap the risks around Greece on top of that. We continue to generally agree with the market sentiment, and that of EU leaders, that the risks of contagion from a negative outcome in Greece are much less these days than before. But with positioning having been cleared out of the short EURUSD trade, negative sentiment there can at least continue to provide risks of a further push lower.”
“Developments on that front have actually been somewhat constructive over the last 48 hours. The door Dijsselbloem opened over the last two weeks that partial disbursements may be possible for partial delivery of reforms seems to be underpinning work at the moment.”
“While it has been confirmed that Greece did consider not repaying the IMF earlier this month and that they do not likely have the cash to make the 6 June repayment, Greece needs very little cash to get through the next month. So while they’ve agreed to little, they may have agreed to just enough to get a small stipend released that rolls the ball ahead by a month.”
“We even had the Greek FinMin Varoufakis heaping praise on Draghi overnight as having “worked exceptionally within ECB limits” and a German newspaper reporting sources that the ECB would not cut the ELA access if Greece misses an IMF payment—although we do wonder if such an outcome might leave the ECB no longer willing to increase ELA access.”
“The big picture here is that we still think further political shifts within Syriza are likely in order to get agreement on a new three year program with long-term funding that Greece needs. So there may be a chance for a better short-term outcome as Greece effectively gets bridge financing, but there are still no signs of a deal that gets us through the summer.”
Key Quotes
“We can heap the risks around Greece on top of that. We continue to generally agree with the market sentiment, and that of EU leaders, that the risks of contagion from a negative outcome in Greece are much less these days than before. But with positioning having been cleared out of the short EURUSD trade, negative sentiment there can at least continue to provide risks of a further push lower.”
“Developments on that front have actually been somewhat constructive over the last 48 hours. The door Dijsselbloem opened over the last two weeks that partial disbursements may be possible for partial delivery of reforms seems to be underpinning work at the moment.”
“While it has been confirmed that Greece did consider not repaying the IMF earlier this month and that they do not likely have the cash to make the 6 June repayment, Greece needs very little cash to get through the next month. So while they’ve agreed to little, they may have agreed to just enough to get a small stipend released that rolls the ball ahead by a month.”
“We even had the Greek FinMin Varoufakis heaping praise on Draghi overnight as having “worked exceptionally within ECB limits” and a German newspaper reporting sources that the ECB would not cut the ELA access if Greece misses an IMF payment—although we do wonder if such an outcome might leave the ECB no longer willing to increase ELA access.”
“The big picture here is that we still think further political shifts within Syriza are likely in order to get agreement on a new three year program with long-term funding that Greece needs. So there may be a chance for a better short-term outcome as Greece effectively gets bridge financing, but there are still no signs of a deal that gets us through the summer.”