Greece Wrangles for More Time and Money

Troika recommendations for Greece leaked and suggest more money and time are needed. US trading was quiet with banks closed for Veterans Day. The Asia-Pacific calendar features Japanese industrial production. More on those Premium Insights below.

The leaked Troika document said Greece may need another 32.6B euros by 2016 and suggested a two-year extension on fiscal targets. It will be difficult for Greece to secure the additional funds because of the waning appetite its Eurozone neighbours but last weeks budget could clear the way. European finance ministers continue to meet in Brussels.

The latest aid tranche will not be delivered this week and Greece may be facing an immediate cash crunch with 5B euros of debt coming due on Friday. The German press reported that the ECB may expand collateral rules to mitigate the crunch but that report was later denied.

The euro was marginally weaker in US trading, sliding to 1.2710 from 1.2725 but volatility was minimal due to the holiday. Fridays low of 1.2689 remains a key line on the chart.

Commodity currencies, led by the Australian dollar, were the top performers on the day after the upbeat Chinese trade data. We warn, however, that the recent slowdown in Chinese imports may be due to a lack of domestic or international demand. If so, exports will begin to show signs of weakening in early 2013.

Quiet trading may continue into the Tokyo session. The lone item of consequence on the calendar is September Japanese industrial production. A 4.1% y/y contraction is expected in another sign that Japan is slipping into recession.

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-AB