The cheque's in the post
Bring me another deadline, this one's split
A woman flying to Athens went to the wrong gate at the airport. The security guards misread her ATH boarding pass as MLA, as did the cabin crew on the aircraft. So she ended up in Malta. Fortunately her baggage went to Athens. Where there was already plenty.
After weeks, nay, months of speculation the deadline for Greece's repayment of €300 million to the International Monetary Fund has arrived. And, surprise surprise, it has been postponed. The IMF and Greece's other creditors were not overly impressed when Athens told them yesterday that it would consolidate the €1.6 billion it owes in June into a single payment at the end of the month.
Investors were not overjoyed either but there was no evidence of panic in financial markets, possibly because everyone could see it coming. The euro did not have a great day though. It was the weakest among the major currencies, losing one cent to the pound and half a US cent. Sterling was Thursday's top dog, sharing the lead with the Swedish krona and strengthening by an average of 0.3%.
IMF warns Fed on rates
In the IMF's annual report on the US economy it lowered the forecast for growth this year from 3.1% to 2.5%. With that in mind, as well as the broader implications of such a move, the IMF asked the Federal Reserve to delay its first rate increase until 2016.
Managing director Christine Lagarde said "there is a strong case for waiting to raise rates until there are more tangible signs of wage or price inflation". She also observed that "regardless of timing, higher US policy rates could still result in volatility… with consequences that go well beyond the US border".
Her comments inevitably caused investors to scale back their expectations for dollar interest rates. There was no dramatic reaction by the dollar but it failed to derive the usual benefit from the euro's discomfort.
Today's list of ecostats is not a long one but it includes three important sets of data: the first revision to Euroland gross domestic product and US and Canadian employment. American nonfarm payrolls are forecast to have increased by about 226k in May.
In 2014 the average monthly increase in nonfarm payrolls was 266k. So far this year it has been 194k. Even if it matches expectations this afternoon's number will confirm a slowdown in the rate of hiring; if it falls short of the forecast it will reinforce yesterday's rate warning by the IMF and will dampen appetite for the US dollar. Analysts expect Canada to have added 10k new jobs in May, replacing half of those lost the previous month.
With the Greek deadline now pushed back more than three weeks it will be the US and Canadian dollars with their heads on the block today. It is even conceivable that the euro could be the winner. Have a good weekend.