Greece Delivers, Awaiting IMF, Troika

<p>Unlike this same time last year, when EU officials were unanimously pressuring Greece to pursue a referendum on staying in the eurozone, today’s rift has […]</p>

Unlike this same time last year, when EU officials were unanimously pressuring Greece to pursue a referendum on staying in the eurozone, today’s rift has shifted to Troika’s positions on Greece and whether it should do more in recognising Athens’ efforts (Victory of pro-eurozone parties over the summer and Parliament’s passing of austerity measures despite ongoing violent street protests).

Can Greece benefit from the publicised differences in views between the IMF and the EU regarding the timing of Athens 120% debt/GDP target? Does Athens get a reprieve?

Today’s better than expected T-bill auction will allow Athens to make its €5billion redemption payment due Friday, further supports Greek bonds and may possibly get the ECB to accept higher collateral by Greek banks borrowing from the ECB.

Integrating the IMF’s publicised underestimation of the deterioration in global economic growth was part and parcel of extending the negotiations between the Troika team and Athens for as many as 5 months. Shifting from misreading the global economy to enforcing a debt deadline that’s eight-years from now does reduce the IMF’s credibility in the face of its negotiators.

Euro had given up gains from an earlier Bild report that Germany favours €44billion EU/IMF disbursement to Greece. The amount includes the €31.3billion installment due last June, another €5billion from Q3 and a further €8.3billion due in Q4. The report cites government sources accepting Athens request to be paid the full sum. Euro dropped off its session highs after German finance ministry refused to confirm the Bild story.  EUR/USD is seen supported at $1.2620, which is above the 50% retracement of the rise from the July lows to the $1.3172 high. Despite our anticipation for an eventual return to 1.3330s later this quarter, we expect lingering downside near the $1.2600s.

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