Talking Points:
- Revised 1Q Eurozone GDP Figures Unlikely to Generate Significant Volatility
- Euro Focused on Greece-Linked News Flow as Funding Deal Remains Elusive
The second revision of first-quarter Eurozone GDP figures headlines the economic calendar in European hours. The release is expected to confirm flash estimates showing output added 0.4 percent in the first three months of the year.
Absent a particularly sharp deviation, the outcome seems unlikely to generate a significant response from the Euro considering its limited implications for near-term ECB monetary policy. The central bank seems to be on auto-pilot as it continues to implement its €60 billion/month QE effort through September 2016.
Greece-related news-flow remains in focus for the single currency, with traders keeping a close eye on commentary from both Athens and the creditor side of negations for signs of progress. Indeed, the inverse correlation between EUR/USD and Greece’s 10-Year bond yield – a proxy for funding fears – is now at a formidable 0.70 on rolling 20-day studies.
While there are no scheduled events on this front in the day ahead, headline risk remains significant as investors monitor rhetoric ahead of a potential meeting between German Chancellor Merkel, French President Hollade and Greek Prime Minister Tsipras on Wednesday. French Finance Minister Michel Sapin conditioned the sit-down on interim progress toward a deal.
