Published at 05:36 (GMT) 27 Apr
Kathimerini: Following the informal Eurogroup meeting in Riga, Latvia, a consensus has emerged that the positions of the Greek government and the official lenders are not close enough to lead to a deal anytime soon. As a result, Greece has to rely on domestic borrowing to fund itself in the weeks ahead since it cannot count on the disbursement of official sector funds. The government may have bought some time by mobilizing the remaining cash reserves across the public sector but everybody knows it will run out of money at some point. So, many are wondering what the endgame is here.
If he (a former high level conservative operative) is right, the government will continue to negotiate hard and call new elections at some point with the goal of winning an absolute majority in Parliament. This will enable Greek PM Alexis Tsipras to solidify his power in SYRIZA and dominate the political scene. With the new mandate, he will have a greater degree of freedom to clinch a new deal with the official creditors, or even part ways with them – with the second scenario being much less likely.
At this point, the differences in negotiations between Greece and its creditors look difficult to overcome, but the country could still fund itself in May. In our view, domestic politics plays a major role in the government's decision making. Its popularity ratings may be high now but have started to slip. So, both economic and political reasoning call for action.
On FX, ongoing focus on Greece, as talks drag on. Some focus above on the government tough stance in the negotiations. Possibility of calling new elections, if needed. EUR/USD at 1.0865-66, offers 1.0900-10, bids at 1.0820-30/1.0800. EUR/NZD at 1.4235-40, off the 2-week highs of 1.4395 seen on Friday, highest since 8 April 1.4442. Support now at 1.4200, resistance at 1.4300 again.
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