WORLD ECONOMIC & MARKET DEVELOPMENTS
GLOBAL MARKETS: The USD was firmer across the board in European trade on Tuesday as Fed Chair Janet Yellen’s hawkish comments on the US labor market earlier this week continued to exert a positive impact. On the flipside, the JPY was among the main underperformers, pressured by the BoJ’s monetary policy decision earlier today to leave its monetary policy unchanged including its interest rate targets — i.e., short-term rate at -0.1% and 10-year JGB bond yield at around 0%. Elsewhere, major government bonds were modestly firmer favored by their safe-haven status in light of the two deadly incidents in Turkey and Germany while major European equity markets were mixed in early trade.
GREECE: The Euroworking Group (EWG) is expected to convene today via teleconference to discuss the benefits that the Greek government decided to grant to socially vulnerable groups, the fiscal impact of which has been a cause for concern to official lenders leading to a temporary halt of the implementation of the short-term debt relief measures. The EWG is also expected to discuss today the progress of the 2nd programme review following the departure of the official lenders’ representatives from Athens.
SOUTH EASTERN EUROPE
CESEE MARKETS: Most emerging market assets were under pressure earlier on Tuesday as the US dollar retained a firm tone denting developing assets’ higher yield allure. Investor appetite towards risky assets also sapped after yesterday’s deadly attacks in Turkey and Germany. Meanwhile, trade activity appeared to be relatively light ahead of the Christmas period. Focus today is on Central Bank monetary policy meetings in Turkey and Hungary.
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