Greek Talks On Bailout Stall Once Again as Euro-Zone Trading Slows
Following an ease of momentum concerning the Euro-Zone data, online forex trading has slowed down for the second week of June. On the back of a promising first week of the month, the fears of a possible default on payments from the Greek government and a Euro-Zone exit have resurfaced after negotiations in Brussels broke down.
In the short-term, volatility in the market has remained subdued but a combination of factors shows that a shadow may be looming over EURUSD. The Euro is experiencing a combination of rising European yields and a poor backdrop from the US economy, culminating in a fear that short-term momentum may not be enough.
Negotiations between Greece and creditors have reached an important stage with the possibility of a default confirmed by officials for the European Union. This is due to the diminishing likelihood of a cash-for-reforms agreement being agreed upon in the near future. Greece look likely to stick to their election promises, meaning that negotiating successfully on a new austerity deal in return for financial aid is unlikely.
At a time when fears over the outcome of negotiations between Greece and its creditors are affecting the Euro, the US Dollar has shown some improved data that may point towards a better outlook. Rising to -37.7 for the US on the Citi Economic Surprise Index, this is the highest it has been since February. This correlates with improved data on employment, consumption and housing for the second quarter of 2015.
Policymakers are likely to take this improved data for the second quarter as an indication that the poor showing in the first quarter was just a transition phase.
