A troika 'deal' has been reached with Greece. Whilst that could be considered good news this revision to the original agreement terms and conditions has been put in place on the basis that Greece now will engage in a fresh round of public sector job cuts in order to meet its obligations to the country's debt holders. The troika is taking the bold view that Greece will actually return to a period of economic growth by 2014, which on the basis of the current predicament, looks unrealistic. However, a further eurozone market crisis looks to have been avoided.
The troika's issues with Portugal look to have been dampened down and their recent crisis looks to have been smoothed over as the prime minister promoted Paulo Portas, the minister whose resignation threatened to bring down the government last week, to deputy prime minister. Portas, who leads the junior party in the ruling coalition, will also oversee negotiations with the troika over the country's bailout.
During an economists' conference in Aix-en-Provence, Bundesbank chief Jens Weidmann renewed calls for eurozone governments to press on with economic reforms. The European Central Bank had helped matters with loose policy but could not solve the crisis:
"Monetary policy has already done a lot to absorb the economic consequences of the crisis, but it cannot solve the crisis. This is the consensus of the Governing Council. The crisis has laid bare structural shortcomings. As such, they require structural solutions."
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In early news the latest figures for Germany's exports have been published and on the face of it they look poor, imports also fell unexpectedly. The figures are 4.8% down month on month. Germany exported goods to the value of 88.2 billion euros and imported goods to the value of 75.2 billion euros in May 2013. Based on provisional data, the Federal Statistical Office (Destatis) also reports that German exports decreased by 4.8% and imports by 2.6% in May 2013 on May 2012. The month-on-month comparison showed opposite developments of exports and imports upon calendar and seasonal adjustment. While exports decreased by 2.4% on April 2013, imports increased by 1.7%. The foreign trade balance showed a surplus of 13.1 billion euros in May 2013.
That other bulwark of European standards, the Swiss, published figures this morning illustrating that unemployment has remained high. Switzerland’s unemployment rate was unchanged in June, holding at the highest since 2010 and indicating that the economy remains at risk of being dragged down by the recession in the neighboring euro area. The jobless rate, adjusted for seasonal swings, remained at 3.2 percent in June, the same rate as in May, the State Secretariat for Economic Affairs in Bern said in an e-mailed statement today. Economists had expected an unemployment rate of 3.2 percent
Fundamental events scheduled for the afternoon that may affect sentiment
The euro group meetings are taking place in the afternoon session and the ECB president Mario Draghi also holds a press conference. Investors and traders will once again be looking for clues as to any detour from the current outlined policy direction of the ECB.
The USA consumer credit figures are published by the USA Federal Reserve in the afternoon session. The expectation is for little change an increase from 11.1 to 13.2 bn.