9th Apr - Dollar strength

Previously on MoreLiver’s:

Wednesday: European data a bit worse

Tuesday: Post-holiday Greek tensions

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EUROPE

Philippe Legrain: The Eurozone’s False Recovery – Project Syndicate

At first glance, the eurozone economy seems like it might finally be on the mend. On closer inspection, however, recent improvements turn out to be modest and probably temporary, casting further doubt on the prevailing policy agenda of fiscal consolidation and structural reform.

UK: As expected, no change in monetary policy – Danske Bank

Spain may not be Greece, but it is Not the Opposite Either – Marc to Market

EU28 current account surplus €38.7 billion – Eurostat

U.K. Trade Deficit Hits Seven-Month High as Sales to U.S. Slump – BB

  GREECE

Athens repays IMF €450m, bond yields slide – FT

Payment Sends Yields Lower, "Next Month Is A Different Matter" – ZH

Euro zone gives Greece six-day deadline to revise reforms: paper – Reuters

Italy’s Padoan Sees Greek Agreement by April 24 Eurogroup Talks – BB

Greece’s reparations demand could bring the euro crisis to a head – FT

  EUROPEAN CENTRAL BANK

ECB will hold monetary line at next week's meeting – TF

The last European Central Bank minutes showed there is no chance the ECB’s asset purchasing program will be reduced in the next 18 months because the barely acceptable baseline projections for inflation depend on it. So we can expect the statement released after next week’s meeting to repeat the strong line taken previously.

ECB preview – Danske Bank

A dovish stance, but no QE news

QE, ‘European style’: Be bold but parsimonious – vox

Sovereign bonds are the latest and biggest quantitative easing (QE) policy conducted by the Eurozone. This column argues that instead of sovereign bonds, the Eurozone should focus on assets that are the closest to job-creating, growth-enhancing, and innovation-promoting activities. In particular, instruments issued by agencies and European institutions should be given a prominent role. But they should also be selected to promote the financing of long-term growth and jobs, not of unsustainable government expenditure.

ECB credibility convinces southern states they can survive a Grexit – FT

Government officials and independent analysts in Lisbon, Madrid and Rome say a chaotic Greek abandonment of the euro, bringing widespread economic distress and social upheaval in its wake, would serve as a cautionary shock and probably weaken anti-euro political forces in countries exposed to possible contagion from Greece.

Deferred tax credits may soon become deferred troubles for some European banks – Bruegel

The EU Commission is reportedly collecting evidence on the use of so-called deferred tax credits (DTCs) in banks in Greece, Portugal, Spain and Italy, to see whether some recent regulatory changes and recognition practices constitute hidden state aid. I review what these instruments are, and why the issue is important.

UNITED STATES

Republicans have an economic strategy from the ’90s–the 1890s – WaPo

The Tea Party won’t purify the market by tying the Fed’s hands – Tony Yates

  FOMC MINUTES

US: Several wanted June rate hike - FOMC minutes review – Nordea

US dollar a key constraint to growth – Danske Bank

World Weary, Un-Patient, Dow-Data-Dependent Fed – ZH

The "Markets" React To Minutes-Implied Fed Confusion – ZH

Different Views on Timing – Bill McBride

Fed officials say June rate hike still in play, hinges on data – Reuters

Fed Officials Divided Over June Liftoff, FOMC Minutes Show – BB

Fed officials split over June rate rise – FT

  WSJ SURVEY

Economists Think Fed Will Wait Until September to Raise Rates – WSJ

What’s Good for Europe and Japan is Good for America, Eventually – WSJ

U.S. Growth Seen Slower Amid Dollar Headwinds – WSJ

REGULARS

Daily Central Banks – WSJ

Hilsenrath’s Take: Big Question for Fed Is Not When, But How To Raise Rates * Dudley: Weak Data Sets Higher Hurdle for June Rate Hike * Fed Minutes: Officials Divided On Whether June Rate Increase Warranted * Europe’s Plunging Borrowing Costs Mark Two New Milestones * BOE Leaves Policy Unchanged

Daily Macro – WSJ

Greece remains a source of great drama for investors in the eurozone, even if that drama rarely materializes as real-world action. Thursday, the country made a 460-million-euro payment to the International Monetary Fund–a payment that its new leftist government had threatened not to make. This suggests the government, which in its ongoing battle with its European creditors tends to employ threats of destabilizing actions in a bid to secure debt relief, has few real cards to play.

Danske Daily – Danske Bank

Global Daily – ABN AMRO

FOMC minutes suggest officials divided on timing of hike, but many saw gradual pace * Our view is the Fed will raise rates from September once every other meeting * Eurozone retail and car sales point to surge in consumer spending in Q1

Euro rates update – Nordea

Eye-Opener – Nordea

We expect US yields to go higher later this year, while German yields will drop further * Foreign bidders dominated the UST 10-year sale yesterday * Don’t expect new tests of the EUR/USD after the FOMC minutes

Morning Markets – TF

Today marks a big day for the Eurozone and its much-heralded recovery, as German industrial numbers will point to the real output of Europe's largest economy and the question of Greece's IMF repayment will finally be settled... one way or the other.

Daily FX Comment – Marc to Market

Dollar Extends Recovery, but Still in Range

Daily Shot – TF

Daily Press Summary – Open Europe

Tsipras and Putin strike positive tone but agree little of substance * Moody’s says UK’s post-Brexit credit rating would depend on future trade arrangements with the EU * Dutch House of Representatives backs wide-ranging reform of EU spending * Mersch: ECB may end QE programme earlier than planned * Marine Le Pen blocks father and National Front founder from standing in elections * Italian financial police detail significant fraud and waste in public sector contracts * IMF calls for greater scrutiny of asset managers * New record high as German exports up 4% in a year

US Open – ZH

US Dollar Surge Returns, Pushes Equity Futures Lower

FX Update – TF

The USD bounded back yesterday after coming under significant pressure as the FOMC minutes proved more hawkish than the market was positioned for. USDCAD saw the most technically compelling action yesterday among USD pairs.

From the Floor – TF

Surprise, surprise – a reading to the latest FOMC meeting minutes reveals something that few expected: there are as many hawks as doves nesting in the Fed. The upshot was broadly USD supportive but ranges look tight with scant data on the horizon. In equities, Alcoa fell on a disappointing outlook and in bonds, core Europe 2-yr yields are all almost at zero.

Martin Sandbu’s Free Lunch – FT

Should the government be bigger? New arguments about the optimal size of the state

OTHER

New financial forecasts – Nordea

The US economy seems to be in a weak spot in Q1 also this year. However, the underlying situation in the economy is strong and will make the Federal Reserve (Fed) start hiking later this year. The European Central Bank’s (ECB) QE programme has so far proved very effective in driving yields further down despite somewhat more positive growth signals from the Euro zone. Our forecast is still that Norges Bank and the Swedish Riksbanken will be in easing mode

Majors & Scandies: Central bank and rates forecasts – Nordea

With ECB bond purchases recently dominating the better macro data EUR bond yields are likely to see new lows in the near term. Although we see higher EUR yields longer out, yields are expected to stay at exceptionally low levels throughout the forecast horizon.  In the US, a central bank starting to normalise policy and an economy showing increasing signs of price pressures favour gradually higher USD yields.

Majors & Scandies: FX forecast – Nordea

As the first Fed interest rate rise nears, the EUR/USD weakening should resume towards parity – unless we reach 1.15, which would make us review the call. The Bank of England will follow the Fed with a hike late this year, helping the GBP against the EUR. The BoJ will keep the door open for further QE in autumn, weakening the JPY. Improving global growth prospects will eventually support commodity currencies and re-weaken the CHF.

EM FX: Financial forecasts – Nordea

We stick to our call of general EM FX weakening versus the USD in the coming months. EM FX is very much a EUR/USD game with most EM currencies being weaker versus the USD and stronger versus the EUR year-to-date. We believe this will be the case for some months. We have revised our short-term forecasts for the PLN, HUF and TRY, though the stories remain unchanged.

IMF Says Bernanke Is Wrong On Secular Stagnation – ZH

Brief Thoughts about the Dollar's Price Action – Marc to Market

FINNISH

Aamukatsaus – Nordea

Fedin pöytäkirjan korkonäkemys vanhentunut |  Saksan tehdastilausten alkuvuosi heikko | Kreikan IMF-lainaerä erääntyy tänään

VM:n salainen muistio: Kreikka on romahduspisteessä – HS

Salainen muistio paljastaa: Suomi varautuu Kreikan eroon eurosta – IS

Valtiovarainministeriön asiakirja maalaa synkän kuvan Kreikasta – Verkkouutiset

Pertti Haaparanta: Latvia ei ole Latvia – Akateeminen talousblogi