WORLD ECONOMIC & MARKET DEVELOPMENTS
GLOBAL MARKETS: Major European bourses kicked off the week on a positive tone favored by the Eurogroup decision late last week to endorse in principal a 3-year ESM stability support to Greece. Encouraging home-related data from China earlier today, also helped. In FX markets, the USD was among the main outperformers on the view that the first Fed rate hike may come earlier than currently expected.
GREECE: Following a cabinet reshuffle last Friday, the Greek government’s focus now turns on the upcoming key vote in the 300-seat Hellenic Parliament on Wednesday, July 22 when it is scheduled to submit the second set of prior actions required under the recent Euro Summit agreement for the commencement of official discussions on a new 3-year ESM loan. Separately, Euro area finance ministers agreed last Friday to grant a bridge loan to Greece with a view to secure partial coverage of the country’s financing needs until the completion of official discussions on an ESM programme. In other news, the bank holiday that was initiated three weeks ago expired yesterday and domestic banks reopened today with a number of restrictions on bank transactions remaining, however, in place.
SOUTH EASTERN EUROPE
SERBIA: In the absence of any significant developments domestically, the EUR/RSD remained bound within a tight range of 119.95/15 – 120.10/30 last week assisted by new Central Bank interventions in the FX markets over the last few sessions to halt the dinar’s renewed firming trend (€130 cumulatively).
CESEE MARKETS: Most CESEE bourses opened higher on Monday, extending last week’s gains after the Eurogroup decided late last week to endorse in principal a 3-year ESM stability support to Greece. In the absence of any significant news domestically, regional currencies were broadly weaker in European trade on Monday, weighed down by recently reinforced expectations for a Fed interest rate hike later this year. Meanwhile, CESEE government bonds were little changed. Looking into this week, Hungary’s and Turkey’s Central Bank meetings take centre stage in the CESEE region.
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