Greece pays off IMF, US JOLTS eyed

Forex News and Events

US JOLTS to be released

Today the US Labor Department is scheduled to release its Job Report for March including data for Jobs Openings (JOLTS). This data remains controversial as we question the trustworthiness of figures due to very lowest samples used for the report creation. The total US Job Openings figures will be released at 4 pm and expectations hover around 5ml jobs opening. Last February, JOLTS figures came in below expectations with 5’014ml vs 5’140ml expected. Despite the ADP miss to predict NFP, an unchanged NFP read indicates that JOLTS should also come in line with survey. Overall, the US Economy is still on track for a sustainable recovery with labor markets leading the way. EURUSD is now trading sideways between 1.1250 and 1.1130.

Greece to pay debt with bailout money again

Over the few days, EUR grinded lower versus USD, amid the uncertainties of Greece’s repayment to the IMF. As the Greek saga is going on, we are still wondering if Greece will ever have the ability to pay off its debt. Let’s recall that Greece has a total debt around $320 Billion. In order to fulfill repayment, the terms of the bailout indicates the necessity for Greece to achieve a massive 4.5% surplus of the GDP each year.

Greece has confirmed late yesterday the payment of an installment of €750m to the IMF which adds up for a May total installment of around €2bn. Let’s point out the fact that Greece has also to reimburse to their overall creditors almost €7bn in June and also in July. We think that it is highly likely that Greece will manage to fully reimburse the IMF, however the other creditors may be at stake. In between Greece is expecting to receive a further €7.2bn of bailout by the end of June. We remain negative on the EURUSD on Greek uncertainty and further monetary policy divergence. Recent unwind of USD long provides a good entry point to reload short EURUSD positions.

G10 Rates Higher, AUD Higher, USD lower and EM in trouble (by Peter Rosenstreich)

Risk sentiment improved significantly on the news that Greece’s finance ministry ordered a €750mn payment to the IMF. This easing of risk tensions has sparked a rally in developed markets yields (led by US and Germany rates). We are seeing the continuation of sizable moves on the mid-to-long end of G10 interest rates curves. Risk of a disorderly or straight non-payment by Greece has helped compress yields (as traders piled into safe haven). The lowering of this event risk is allowing capital to search for quality higher returns.

In particular, Australia yields have jumped pushing AUD higher verse the USD. The strong AUD was also supported by news that homes loans approval climbed 1.6% (verse 1.0%) in March. The RBA has been vocal regarding their concern over a “white hot” housing market. Todays, evidence that housing growth is accelerating will lessen the ability for the RBA to cut rates further. Should incoming data (starting with national federal budget) support the RBAs end of easing cycle stance, AUD should continue to appreciate. To that regard, China’s efforts to rejuvenated growth through monetary policy easing will certainly assist Australia’s growth outlook.

Elsewhere, the sharp rise in developed markets rates has hit EM currency hard. We are seeing heavy selling across the EM currency complex. Option markets are showing big jumps implied volatility. Countries with USD denominated current account deficits are extremely exposed at this moment. While most EM are vulnerable, RUB, INR, ZAR and TRY are prime for significant correction verse the USD. While yield starved investors might see EM rates as an opportunity, amidst the current sell-off, fear of a deeper carry unwind will keep risk seekers sidelined.

GBPUSD - Testing the resistance at 1.5620