Goldman's Take On Greek Non-Expulsion News, And Record German Imports And Exports

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Last week we predicted that rumors of a Greek (self) expulsion are nothing but hot air, and an attempt to escalate so-far failing rhetoric at improving the economics of austerity. This was proven right, even as we also predicted, the EURUSD surprisingly remains sticky in the 1.438 area, meaning 120 pips in EURUSD was wiped out on purpose. Here is Goldman's take on this weekend's developments.

From Goldman's Dirk Schumacher

Policy makers discuss further help package for Greece. The head of the Euro group Juncker said after a meeting of finance ministers last Friday that "we believe that Greece will need a further program". According to FT Deutschland such a new program could include an extension of repayments of the loan provided under the first program as well as a reduction of the interest rate for these loans. Juncker also dismissed the idea that an exit of Greece from the Euro-zone was being discussed: "This is a stupid idea, it is not a direction we will ever embark on".

Newspaper Die Welt reports that the German government demands as a pre-condition for any further program that Greece will also negotiate a - voluntary - maturity extension with its private creditors.

The Troika of IMF, EU, and ECB will present middle of May their latest assessment on the implementation of the Greek adjustment program.

Metal processing industry plans to create some 80,000 additional jobs this year. The head of the metal sector employers association Gesamtmetall said in an interview over the weekend that the sector will add another 80,000 jobs until the end of the year. This is just the latest indication of the rude health of the German manufacturing sector, in particular when keeping in mind that average annual productivity growth is more than 3% for the sector.

German data releases today

Exports and imports surge in March. Exports (nominal, seasonally adjusted) rose by 7.4%mom after +2.8% while imports rose 3.0% after 4.1%. Exports and imports are both at their highest level ever, clearly surpassing now their pre-crisis peak. Net trade will contribute again strongly to growth in Q1:2011; we are forecasting GDP to be up 0.9%qoq in Q1.