Greece Squeezing Some Money Out of Real Estate |
The continuing rally on the risk asset markets yesterday was buoyed by the positive news coming out of the Euro zone. At a meeting with Greek Prime Minister George Papandreou, German Chancellor Angela Merkel yet again announced that Germany will provide all necessary aid to Greece and not allow the country to leave the Euro zone. Greece’s parliament voted 115 to 142 to pass the prime minister’s initiative to introduce an additional tax on property, which says that the country’s leadership is trying to meet all the conditions to qualify to receive another 8 billion Euro tranche of aid. In addition, the Greek parliament also ratified changes to the agreement on the European Financial Stability Fund (EFSF) aimed at increasing it. Tomorrow, September 29, the German parliament should ratify these changes; when all 17 of the Euro zone countries ratify the amendments, the new agreement will come into force. Riding on this news, the unified currency rose by the end of the day to 1.3580 on the EUR/USD pair, managing to get to 1.3650, while the British pound sterling rose to 1.5660.
Out of all the day’s events that are capable of influencing the general news background and influencing the financial markets, a couple in particular merit special mention: European Central Bank council member Yves Mersch will speak at 4:00PM (Moscow Time) and Thomas Jordan, vice-president of the Swiss National Bank, will speak at 8:15PM (Moscow Time) in Basil. Jordan is already well-known to the market from his speeches, which tend to strongly influence the Swiss franc’s exchange rate, therefore RoyalMaxBrokers economists recommend to those who are oriented on the Swiss currency to be especially vigilant.
It was reported yesterday that the Russian Central Bank sold over $6 billion this month to support the ruble and is not yet planning to review the parameters of the exchange rate band, the upper limit of which is currently at 37.5 against a basket of currencies. At a press conference in Moscow yesterday, head of the Central Bank Sergei Ignatiev said that peak sales of the currency occurred on September 26 when the regulator sold $2.365 billion. The bank continued purchases of gold, which were “significant” this year.
RoyalMaxBrokers analysts have noted that the drop in the Russian currency has created serious risks of rising inflation. The Central Bank is expecting the ruble’s drop to be short-term, and year-end inflation is expected to stay within the earlier-predicted 6 – 7% range.
The price of gold continues to recover after a strong correction, bouncing back from a support level around $1600/oz thanks to positive expectations from market players regarding the situation in the Euro zone. Gold’s spot price rose about 1.5% in 24 hours and at the time of writing this report, the price was at $1645 per troy ounce. Traders are returning to the precious metals market after earlier fears that a possible default in Greece would lead to insufficient liquidity given the sharp drop in prices of other assets.
Price quotes on oil increased due to the general positive on the stock markets and the rally in other risk assets. WTI rose 3.7%, which is the strongest growth of the last six days. The positive attitude on the markets was attributed to optimistic expectations of resolving the debt crisis in Europe. A significant volume of purchases was observed on the oil market due to the closing of short positions on this commodity. Another factor contributing to the growth was traders’ hope that the $80 per barrel cost was the bottom, after which prices could only increase. Nevertheless, the price of oil may go down in the short term if the stream of positive news is replaced by more negative information.
At 4:30PM (Moscow Time), the US Census Bureau will publish data on the change in the volume of durable goods orders in August. The market takes this figure into account since it helps predict the situation in the economy’s manufacturing sector in the near future.
About the author: Royal Max Brokers
 |
