Good morning,
We kick off the week with a fairly quiet data calendar, but volume should be picking up quickly as the US re-joins after the bank holiday and long weekend.
At 7 am this morning we had German Industrial Production which came in at -3.7% versus the -1.1% expectation. Given that the April industrial reading revealed the biggest slowdown in four years, this latest number is another worrying hit. Whilst the Trade War predominantly focuses on the US and China, Germany’s import and export data will be a squeeze. There is an expectation that macro data from the Eurozone will continue to the downside and the news of Deutsche Bank, albeit in the financial space, will provide fresh concerns.
Greece’s voters went back to the polls again which resulted in a surprise landslide victory for the New Democracy Party. This leftist party which promised so much but failed to deliver only scooped up 31.53% of the votes. Following record high unemployment and a shrinking economy, coupled with tough fiscal measures in return for an international bailout, the result was perhaps not a wild surprise. However, we see a very similar situation to Italy with promises of lower taxes and further re-negotiations of credit terms – which looks great on paper but is extremely difficult to deliver.
On a wider level, for clients exposed to exotic currencies, the Turkish Lira opened with 2.3% following Erdogan’s decision to remove the central bank governor. The price of oil will also be in the crosshairs after the UK and the EU raised concerns over Iran and their current run-rate of uranium enrichment, breaching the 2015 nuclear deal. These are very uncertain times but there are also great opportunities to determine your future currency costs through hedging and forward buying.
Have a great day.