Greek Finance Minister quits
- German Factory Orders m/m: -0.2%
- US ISM Non-Manufacturing PMI: 56.0
- NZIER Business Confidence: 5
The Greek “No” vote has continued to dominate market headlines with the resignation of Greek Finance Minister Yanis Varoufakis. Varoufakis said he would quit if Greece voted “yes”; despite the resounding “No” victory Varoufakis headed for the exit anyway. The ex-Greek Finance Minister said the decision to step down is to help the Greek government secure a deal with creditors. Although the referendum is over, this story is ongoing and the Euro, therefore will remain very unstable.
Capital controls remain in Greece with restrictions on money transfers and withdrawals at cash machines limited to a maximum of €60 a day. With Greek banks needing further assistance to avoid collapsing, they found no comfort from the ECB yesterday as they demanded that for banks in Greece to secure further emergency funding, Greek banks need to put up more assets as collateral. Banks are now set to remain closed until Wednesday and it is still unclear when Athens will run out of cash, but a resolve or an agreement could be seen at the Euro group meeting today.
After the no vote, economists from both JPMorgan and Barclays moved to make a Greek exit from Europe’s currency union their base case scenario. Morgan Stanley said there is now a 75% chance of a Greek exit, whilst BNP Paribas increased the probability of Greece leaving to 70%, up from just 20% a week ago. Any further news from the Greek story will continue to inject high amounts of volatility into the market.
The economic docket was relatively light yesterday, with only one piece of high tier data to note. US ISM non-manufacturing PMI disappointed yesterday as the number failed to meet economists’ consensus, posting a worse than expected 56.0. However, the figure remained above 50 and in expansion for its 65th consecutive month.
- UK Manufacturing Production m/m
- Eurogroup Meetings
- Euro Summit
- CAD Trade Balance
- US Trade Balance
UK manufacturing production will dominate the morning’s session, whilst focus switches to the US trade balance in the afternoon. High tier data as mentioned will continue to be heavily monitored by markets as economists’ try to gain insight into the Federal Reserve’s and the Bank of England’s interest rate plans.