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Tuesday, May 26

26th May - USD strength

Previously on MoreLiver’s:

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Peter Spiegel: The big eurozone overhaul may not be so bigFT
The report being pulled together may propose little more than a bit of euro housekeeping in the near term. Although more ambitious plans could be included, the leaked documents show they will be relegated to the medium and long term – a tried and true EU tradition that is normally a recipe for bureaucratic burial.

How is the weak euro affecting different sectors? DB Research
At sectoral level, the positive effects of the euro's current weakness are clearly outweighing its drawbacks.

Spain: No country for absolute majoritiesOpen Europe
The latest string of Spanish regional and local elections yielded a fragmented political landscape. The two big traditional parties suffered losses, while the two main newcomers - the anti-establishment Podemos and the centrist Ciudadanos - now hold the key to stable governments in most Spanish regions

Why Greece’s Negotiators Can’t Afford to Ignore Spain NowWSJ

Why some parties respond to Eurosceptic public opinion while others don’tEuropp / LSE
Several countries have experienced a rise in Eurosceptic public opinion since the start of the financial crisis, but what effect does this change in attitudes have on the platforms of political parties? Christopher Williams presents findings from a study of party positions in European Parliament elections. He writes that while some parties do respond to Eurosceptic public opinion by adopting a more critical stance toward the integration process, this effect is not uniform across all parties.

Cameron to Juncker: EU ‘must change’Politico

Gideon Rachman: Cameron, Europe and the hand of historyFT
Britain has always tried to be a European and a global power

Janan Ganesh: The cold-blooded case for staying in EuropeFT
If the In campaigners are traduced as bloodless accountants, they know they are on to a winner

Mark Carney Loads Up Shotgun Format for BOE’s Super ThursdayBB
Carney is overhauling a process that’s almost two decades old and will present interest-rate decisions, voting records and the quarterly Inflation Report simultaneously, rather than spread over the current two weeks.

Cameron humiliated as France and Germany tighten grip on EuropeThe Daily Mail

Greece's half-baked solutions no longer palatableTF

Greece Could Bundle Its Next IMF Payments to Buy Even More Time. But at What Cost?WSJ

A parallel currency for Greece: Part Ivox
To prevent it from defaulting on its debt, the Greek government might need to introduce a new domestic currency, in parallel to the euro. This column, the first in a two-part series, compares the current proposals for a parallel currency and discusses how such a policy instrument could promote economic recovery.

A parallel currency for Greece: Part IIvox
Introducing a currency in parallel to the euro could help Greece repay its external debt and resume economic activity. This second column in a two-part series evaluates the different options and their effects on aggregate demand and fiscal sustainability. The authors propose a tax credit certificates programme, which they argue could generate new spending capacity and avoid the adoption of new austerity measures.

Yanis Varoufakis: Austerity Is the Only Deal-BreakerProject Syndicate
Greece's government is eager to implement an agenda that includes all of the economic reforms that its creditors expect, and is uniquely able to maintain the public’s support for a sound economic program. What it will not do is embrace a cure – deeper austerity – that kills the patient.

Can’t pay, won’t payReuters

Varoufakis has a point –Greek crisis mostly about the collapse of NGDPLars Christensen

Paul Krugman: Grexit and the Morning AfterNYT

Greece Returns to Talks With Varoufakis Blaming CreditorsBB

What Would Happen If Greece Doesn’t Pay the IMF: Q&ABB

Citi: ECB's Bizarro QE Taper May Add To Summer Bond Market VolatilityZH

Ilargi: Mario Draghi’s Slippery Downward SlopeYves Smith

The residual seasonality puzzleBruegel
While seasonal adjustment is generally considered uninteresting, the repetition of low first quarter GDP releases since 2010 has led many to wonder if a predictable seasonal pattern remains in the published data. The U.S. Bureau of Economic Analysis is investigating the issue and will report on its findings in July.

Gavyn Davies: Technology, inflation and the Federal ReserveFT
There is no certainty here — the official data might be right. But an increasing number of economists from across the spectrum believe that the possible under-estimation of productivity growth could lead to a major policy mistake.

The taming of the Fed’s balance sheetFT
The exact timing of the Federal Reserve’s first interest rate rise is uncertain, but even less clear is what will happen to the $4tn pile of bonds the central bank amassed during the financial crisis.

Case-Shiller Home Prices Rise Over 5% YoY To 7 Year High – ZH
Case-Shiller: National House Price Index increased 4.1% year-over-year in March – Bill McBride
New Home Sales Rebound Despite Median Price Rising To Just Shy Of All Time High – ZH
New Home Sales increased to 517,000 Annual Rate in April – Bill McBride
Comments on New Home Sales – Bill McBride
Durable Goods Slide YoY 4th Month In A Row Despite Dramatic Upward Revisions – ZH
US Services PMI Slides To Lowest Since January – ZH
Stocks, Bonds, Commodities Tumble On Durable Goods "Good News", USD Soars – ZH

Max McKegg : Dollar rally regains strength on inflation and Yellen speechTF
The markets took US Federal Reserve Chair Janet Yellen's speech to signal the FOMC will not wait to see “the whites of inflation's eyes” before firing the first bullet, and a lift-off in September is looking more likely. There was no change to the party line in ECB President Draghi's speech or in BoJ policy, both of which support the dollar against the euro and yen.

Four Things that Happened Monday You should Know AboutMarc Chandler

George Magnus: Investors are playing a ‘greater fool’ gameFT
Market anomalies abound as debt levels rise and interest rates stagnate

Global FX Strategy: summer time sadness for the bullsNordea
We expect the USD to rebound as the US data improves and the Markets start pricing in the Fed hike in September. The relief for the Emerging Market currencies will likely be disturbed by that as well. The GBP strength won’t last, as post-election risks will prevail, possibly making the BoE keep the rate path lower. The JPY weakening resumes…but uncertainty growing. The SNB will have to intervene more to fight the CHF strength.

G-7 Finance Officials to Discuss Loose Monetary Policy RisksWSJ

Daily Central BanksWSJ
Hilsenrath’s Take: Fed Confronts an Economy Plagued by Mismeasurement * Yellen: Fed on Track to Raise Rates This Year * Fed’s Fischer Sees Short-Term Rate at 3.25%-4% in Three to Four Years * G-7 Finance Officials to Discuss Loose Monetary Policy Risks * IMF Official Says Chinese Yuan No Longer Undervalued

Daily MacroWSJ
The only thing that’s clear is Greece doesn’t have any money or much time. But even if some last-minute agreement is hammered out, that won’t be the end of the story. Greece needs a comprehensive solution, including wholesale debt restructuring and serious economic reform. Neither’s likely to be easy.

Danske DailyDanske Bank

Greece in trouble meeting deadline? * Fed signals rate hike later in the year * Stronger dollar

Morning MarketsTF
Today's Distributive Trades Survey will shine light on the UK's retail spending for May. If the data show optimism, this will have a bullish effect on sterling. But consensus expects only a modest improvement.

Daily FX CommentMarc Chandler
Dollar Rallies in Asia and Europe, but may Pull Back in North America

Daily ShotTF
Major stock markets are still doing well, in particular the one in Shanghai, but also the US has for long not seen a bigger correction. Steel and soybeans on the other hand are under pressure.

Daily Press SummaryOpen Europe
France and Germany reiterate position on Eurozone-led Treaty change as Cameron begins European charm offensive * Syriza divided over Eurozone negotiations as Greek government considers missing payment to IMF * German companies: “EU would hold significantly less power” in the case of Brexit * Traditional parties suffer heavy losses in Spanish local elections * Nationalist candidate triumphs in Polish Presidential elections * Osborne considers Treasury study into costs and benefits of EU membership *

Brussels PlaybookPolitico

Futures In The Red On Europe Jitters Ahead Of Obligatory Low-Volume Levitation

From the FloorTF
USDJPY has finally broken out of the range in which it had seemed locked forever, and with 122.50 already gone, the potential path towards 124.00 is opening.

Euron halventuminen ei ole vielä ohi | Markkinat avautuvat jälleen tänään eilisen vapaapäivän jälkeen | USA:n kestotavaratilausten odotetaan kääntyneen kasvuun

Viikkokatsaus: Onko Saksan vauhti hiipumassa?Nordea
Saksan tulevaisuuden odotukset laskeneet | Uusia työpaikkoja luodaan | Saksan taloussykli eri tahdissa kuin muu euroalue

Radiohaastattelu Euroalueen talouspolitiikastaRoger Wessman

Henri Myllyniemi: Sijoittajat ihmettelemässä EurooppaaUS