But be aware of possible cow dung included ;-)
NEW YORK, May 26 (IFR) - With the commencement of the G8 meeting today the market has been a bit edgy, traders noted lower than normal road traffic on their way to New York trading desks and speculate that ahead of the long US holiday weekend and expectations the G8 meeting would probably be the usual disappointment, have taken a few extra days R & R. The result seems to have been lower liquidity than usual ahead of month end final fixes and subsequent price exaggeration.
The Chinese commitment this morning to support the EFSM bond sales to finance the Portugal bailout sparked the surge over 1.4200 (1.4207 paid) however Juncker headlines that the IMF may not be able to hand over the cash for a second Greek bailout tranche buried the nascent rally and saw spot collapse to 1.4071 given in NY trading, just 5 pips above the overnight low. Oversold 24-hr Bollinger bands at 1.4050 and 1.4010 would still allow further downside, the real question being what politician steps up next to insert foot in mouth?
Juncker stated that IMF rules apply for the next tranche of the Greek loan financing and that the IMF needs a financing guarantee to comply with IMF rules on assistance packages. Juncker says the "troika" report comes out next week and no decisions can be made until that report is published. For their part the IMF just rushed out a public statement "IMF "Seeks to ensure Greek program "adequately financed; crucial to Greek plan success."
It hasn't helped much, fresh 1.4066 lows just served up. Juncker says the Eurogroup will not "rule out" another Greek bailout; says the risks of a Greek debt rescheduling are "enormous"; he says the Eurogroup are against re-profiling of Greek debt; Greece urgently needs structural reforms; Greece won't reach 2011 budget deficit goal. Greek re-profiling without extra measures an "aberration" (DJ News)
Reuters News reported Juncker said that if IMF funding is not available due to technical restrictions "there would be pressure on reluctant European countries to do so" "If the Europeans have to acknowledge that the disbursement from the IMF on 29 June cannot be operationally implemented then the expectation of the IMF is that the Europeans would step in for the IMF and take upon themselves the IMF's portion of the financing. That won't work because in certain parliaments - Germany, Finland and the Netherlands and others too - there is no preparedness to do so."
With the IMF between a rock and a hard place and in the midst of a leadership struggle (Carstens and Lagarde front runners) it's a very bad time for this to happen so this G8 meeting comes at a very inopportune time ahead of the IMF/EU/ECB report on Greece scheduled for release next week. for the politicians to be seen fiddling whilst Athens burns would be very bad indeed. China may be prepared to help out Portugal (after all the investments are not even what they receive in interest on their reserves) but its unlikely they'll agree to throw more money at Greece, publicly anyway, without some some verbal assurances. Then again China is an autocracy and in the end can do what they want .. so they may do just that, after wringing out some stiff concessions.
All hopes are on the Greek privatization program and Greek gold ... but the demonstrations yesterday revealed the populace aren't on board with another round of austerity cuts ... and opposition pols are letting the voters' voices be heard. EUR/USD and Euro debt markets are poised on the precipice ... lack of action will cause a plunge into the chasm. Spot last 1.4095. [email protected]
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