21 July, AtoZForex.com, Lagos – It started out a quiet week, as the economic data calendar for the day was scanty. As attention on Greece eases, the euro has continued its fall. Another set of parliamentary votes is scheduled to take place tomorrow as Greek Parliament will vote to decide on a second package of prerequisites for further financial assistance, including tax increases on farmers. To the relief of the country, the banks are back in operations after closing for three weeks on the back of capital controls. The settlement of outstanding debt has also commenced, as Greece gave the order to repay 6.8 billion euros ($7.4 billion) to creditors after last week’s tentative bailout deal, the Finance Ministry said. The payment include settlement to the European Central Bank, the International Monetary Fund and Greece’s central bank, according to a Finance Ministry official. Although the financial markets remain closed in the mean time. It’s a gradual process of stabilization as withdrawal limits and restrictions on transfers are still in place.
Greek Debt Relief
Another set of concerns is the lobby for debt relief. ECB’s Mario Draghi joined calls for relief to Athens, following IMF’s Christine Largade’s advance for the same course. German Chancellor Angela Merkel said Greece has to be seen to co-operate on the terms and conditions of its bailout package first before any debt relief can be discussed. She said in an interview on Sunday in a German television: “When the first successful assessment of the program being negotiated now is completed, exactly this question will be discussed,” “Not now, but then.” After a split in the Syriza party due to the new debt agreement brokered by PM Alexi Tsipras, it remains a difficult situation for the PM as the deal is seen as counter to the core values of the party. The same values that brought him into power in the first place.
Canada Wholesale Disappoints
Canada has been hit hard by the fall in oil prices, creating a ripple effect across many sectors of the economy. At this point, it should be no big surprise that the US economy has not performed quite impressively in the year so far. This has prompted a response from the central bank as they the Bank of Canada lowered its overnight rate target as the oils shock hit the country, almost sending it into a recession. The overnight rate was dropped from 0.75% to 0.50%., the first cut for the year. Total CPI inflation has been around 1 per cent in recent months, reflecting year-over-year price declines for consumer energy products. Core inflation has been close to 2 per cent, with disinflationary pressures from economic slack being offset by transitory effects of the past depreciation of the Canadian dollar and some sector-specific factors. Yesterday’s disappointing Wholesale Sales m/m figures adds to the growing bad data from the country. According to the department of statistics, Wholesale sales decreased 1.0% to $54.5 billion in May, following two consecutive increases. Lower sales in four subsectors, which together represented 65% of wholesale sales, accounted for the decline. Excluding the motor vehicle and parts subsector, wholesale sales declined 0.6%. The Canadian dollar has been falling sharply against the USD, riding on the strength of the green back and rate hike anticipation, as against weakness in the Canadian economy.
With very few important economic releases scheduled for today, the Reserve bank of Australia released its monetary policy meeting minutes. One of the key takeaways is that it was observed that the exchange rate had thus far offered less assistance than would normally be expected in achieving balanced growth in the economy, and again reiterated that further depreciation seemed both likely and necessary.