Although the recent Greece headlines present a positive case for the ever-frustrating Greek crisis, 20th July, when the Hellenic Republic has to repay the ECB, remains the big deadline, according to Kathleen Brooks. She further explains how a failure to repay the ECB might spell doom for the Greek banks
The uncertainty on the Greek issue is having its impact on the Eurostoxx index. The fall in Italian yields, combined with the rise in German yields suggest that the market remains on risk-on mode. Watch how Kathleen explains the relationship between European stocks and yields.
What will be the outlook for Equities ahead?
No clear call for the week ahead for European equities but the market will follow yields closely. Key reasons highlighted for this view include:
1 – ECB’s QE
2 – Fed’s rate hike expectations
3 – China growth slowdown concerns and stock market shamble
Greece remains the driving factor, but fails to have any impact on the global stocks.
EUR back being in the carry game, lower levels are near.
Kathleen favours being bullish on the Dollar. The positive outlook on the greenback is as a result of the expected shift in focus back to the US story. With Yellen sending a bullish message on Friday and Greece situation finally put to bed, EUR/USD downside towards 1.06-1.07 is likely to resume after a quiet trade this month.
Note Kathleen’s call for key currencies to trade versus the USD in the video.
The CFTC data shows that people are remaining out of the EUR market. EUR shorts maxed out in April, and have recovered steadily to form a straight line in the past weeks, which supports the above view. The single currency is being used again as a funding currency.Signing off, Kathleen does favour the USD, but notes that she will likely remain away from US equity space.'