World Economy

Greece Trapped in Uncertainty

Greece Trapped in UncertaintyGreece Trapped in Uncertainty

European Indices were set to open higher Monday morning but traders will proceed with caution as fears over the state of the European economy and Greece continue to cloud the markets reports Capital Spreads.

“The Greek economy remains trapped in continuous uncertainty caused by unattainable fiscal balance targets that further the vicious cycle of austerity and recession.” Greek Prime Minister Alexis Tsipas wrote on Sunday, ForexSpace reported.

With Grexit fever taking a hold of the markets, it expects a knee-jerk reaction to any minor development in what will most likely be a volatile week of trading.

The US economy contracted 0.7% during the first quarter fuelling speculation that the Fed will not rush to raise rates soon. Despite the official stance the slump will be temporary, the Dow Jones plunged 120 points to 18,024. In addition consumer confidence fell to a six months low as investors are weighing how serious is the slowdown.

Talks between Greece and its EU creditors seem to be going down to the wire as the agreement has not been reached. Global markets have started to price in implications of missing payments due later this week and the possibility of introducing capital controls. However, the shared currency gained 40 pips against the US dollar to 1.0982 as if the market still believes the parties will eventually find a solution.

Oil rig count fell again to the lowest level since August 2010 as the WTI crude prices rallied sharply gaining $2.32 to $60.30 a barrel.  The outlook of interest rates moving higher was hit last Friday by the weaker the expected US economic data thus supporting gold prices. The precious metal rose $1.1 to $1190.7.