Greece Down to the Wire

After flat rejecting the list of Greek proposals delivered yesterday in advance of the Institutions’ draft of the compromise, creditors today are set to release their own proposal. It is widely viewed as the final ultimatum for the country and threatens to add to existing political discord, possibly bringing the ruling coalition to the brink. Much of the proposed solutions which include labor reforms and further privatizations of state assets are unlikely to gain traction back in Greece, making a potential risk-reversal in the Euro completely possible after yesterday’s spectacular rally. Meanwhile, Greece continues to pivot eastward after the invitation to join the BRIC bank. The Greek’s just signed a memorandum of understanding with Russia to build a gas pipeline across the nation to connect Turkey with the rest of Europe. The Euro is retreating slightly from yesterday’s exuberance, ticking lower against the Pound ahead of today’s announcement.

Annualized GDP expands more than expectations but trends below prior number despite strengthening quarterly growth which rose from 0.50% to 0.90%, beating estimates of 0.70% as the impacts of looser monetary policies are felt across the economy. This is the fastest growth seen since the first quarter of 2014 which recorded 1.10% growth. The positive momentum came from exports which added 0.50% to GDP supported by the rise in consumption expenditures which add 0.50%. Nevertheless, despite the positivity, dragging on the economy was business investment as companies slash capital expenditures. The weakness in the construction sector also negatively impacted the number, even though the housing sector remains a concern for the Central Bank due to the propensity to form a bubble. The Australian dollar has continued to add to yesterday’s gains following the monetary policy decision, with AUDUSD trending higher, rallying 0.36%.