EU Declines To Extend Greek Budget Cut Deadline, Ends Overnight EURUSD Ramp

Many have been scratching their heads over just why the EURUSD hit a multi-month high of over 1.33 in the overnight session after once again, nothing was resolved in Greece, and in fact Greece has come begging to the finmin meeting in Brussels hoping the Troika would simply let it slide with open issues relating to pension cuts. That scratching promptly came to an end some minutes ago after the EU's Altafaj said there would be no deadline extension, somewhat illogically since there is no deal yet and the deadline has already passed, but some are finally starting to grasp that putting the ball back in the Troika's court is actually not a good thing since it is Germany's desire at this point merely to have the smallest excuse to part ways with Greece. The EURUSD has thus dipped by 60 pips back to levels seen last night, yet levels that are still 250 pips rich to the 1.30 seen three days ago before the relentless rumor (and hope)-driven ramp up commenced. Should there be nothing favorable to come out of the FinMin meeting today look for that difference to promptly close, now that there are just 40 days left until the heard Deadline of March 20, and a bond exchange offer needs an absolute minimum of 30 days before results are tabulated, and holdouts (yes there will be many billions in holdouts) are calculated.

Bloomberg summarizes the long overdue shift in mood:

  • First Word Cross Asset Dashboard shows sentiment slipping during European trading, with EU stocks below earlier highs, U.S. futures lower, and FX mixed as Greek debt talks hit yet another snag, writes Bloomberg analyst TJ Marta in following note:
  • Pension agreement continues to prevent successful end of Greek talks; IMF gave Greece another 15 days to identify another EUR300m of cuts
  • EU claiming no knowledge of 15-day extension
  • EU bond yield spread to bunds mostly modestly wider
  • Bund, Treasury yields mostly modestly to moderately lower; U.S. 10-yr yield +1.8bps in typical post-auction underperformance
  • FX, commodities mixed in modest ranges