Greece Considers Debt Default

Athens is looking at debt non-payment unless the government manages to strike an agreement with creditors by April. Greece must repay €2.4 billion in Treasury bills after paying back a loan worth €460 million to the IMF.

It decided to hold back another €2.5 billion of payments to the IMF for May and June if the euro zone refuses to make available the bailout fund.

The Greek government is running out of cash to pay salaries and pensions for public sector employees. However, the finance ministry reiterated the government's commitment to arrive at a reciprocally beneficial solution compliant with its charter.

Greek officials have already recommenced technical discussions with representatives of the IMF, World Bank and ECB both in Athens and Brussels regarding monetary measures, budget goals and privatization. Creditors say they will not give out funds to settle debt installments.

The problem arose after €7.2 billion in rescue money which was supposed to have been released to Greece in 2014 was withheld due to differences of opinion between Athens and European/IMF lenders over economic reforms.

Among these are changes in the pension system, cuts in payments given to Greek pensioners, and procedures to allow mass firings by employers in the private sector.

JPY and USD

The Japanese yen gained versus the US dollar as the Bank of Japan maintained its policy. The pair of USD and JPY swapped hands at 119.76. It was down 0.45 percent. On the other hand, AUD and USD traded at 0.7674. It was up 0.54 percent.

The Bank of Japan voted 8 to 1 vote to just keep the policy mark untouched while the only dissenter (Takahide Kiuchi) who opposed the October 31 easing wanted a lower target than that one prior to the last easing.

That board member said the central bank should continue this excessive degree of easing only from April 4, 2013 up to the two-year period so it will not be exaggerated. He also insisted policy target prior to the October 31 easing was proper.

Kuichi suggested that the central bank must perform money market operations along with asset acquisition so the monetary source and unsettled amount outside of JGB holdings will grow annually at about ¥45 trillion.

The board rejected his proposition.

Meanwhile, the US Dollar Index was recorded at 97.82. It was down 0.43 percent in Asian trading.

The MARKIT Euro Zone Services Business Activity Index went up from 53.7 (February) to 54.2 (March).

Growth in Germany, Spain and Italy accelerated development while the UK’s PMI service sector reached a peak of 58.9 reaching a multi-month high.

Price discounting in the euro region pushed growth in the rest of the European continent.

OPEC Must Reduce Oil Supply

The Organization of Petroleum Exporting Countries needs to make a turnaround and cut down supply by at least 800,000 barrels daily to avert the return of Iranian oil from hampering crude prices, according to the OPEC governor from Libya.

Samir Kamal, who is also planning head of Libya’s Oil Ministry, insisted that OPEC bloc members must review their strategies carefully.

Kamal said it is important to agree in reducing production levels especially after Iran has declared to increase oil production.

The oil exports of Tehran have been cut back by nearly ½ since 2012 because of sanctions by Western powers.

Kamal speaks for Libya as member of the board of governors. However, this group only influences but it does not make OPEC policy decisions.

When OPEC met last November, Libya was one of the member-nations that called for a reduction of oil production. The organization will reconvene on June 5 to formulate policies.

OPEC members like Venezuela and Iran did not dispute the bloc's no-cut decision in 2014. Yet, they had qualms regarding this verdict and supported supply reduction.

Meanwhile, 18 oil producers from Africa are pushing for output controls to boost prices which have allegedly dropped to levels that can set off social unrest.

These nations are not members of OPEC. However, they do not have the backing of Saudi Arabia and OPEC members from the Gulf region.

Saudi Arabia already boosted production to a record high while Kuwait declared OPEC will stick to its present policy during the bloc’s next meeting.

Russia-China Natural Gas Deal

It took nearly 10 years before Russia and China were able to finalize their accord which provides that the former will supply the latter with natural gas amounting to $400 billion.

Government-owned GAZPROM is intent in firming up this deal despite the fact crude oil has plunged nearly 40 percent in the last six months and weakened the bargaining power of the oil firm.

This has reduced available funds for a second pipeline from Russia to China.

According to a senior researcher from the Oxford Institute for Energy Studies, the Russian government can give priority to another pipeline which is cheaper and faster to construct. However, this could be less useful for the Chinese government which is fully aware that they have the leverage.

The two nations signed the covenant on the second 30-year gas concord which involves building a conduit from West Siberia. This can deliver a maximum of 30 billion cubic meters of gas annually. This is an addition to the 38 billion cubic meters indicated in the first agreement.

Meanwhile, Brent crude oil has went down to around $58 per barrel from $92 due to oversupply.

However, the head of the company’s export division said weak crude prices will not last eternally.

GAZPROM realizes the interest of Beijing in this project. Hence, the jointly satisfactory solutions for its execution will be accomplished.

China’s demand for gas is increasing. In fact, it needs to import no less than 150 billion cubic meters of gas yearly for the next 15 years even if the economy continues to become lethargic.

Time Stamps for UK FOREX Trades

The treasury department of the United Kingdom has advised the Bank of England to use time stamps for FOREX transactions. This is one reform that advocates claim will ensure that banks cannot take advantage of clients.

However, the BOE is indifferent to the suggestion which raised concerns as to how thorough the central bank will be in its desire to mend London’s tainted reputation as a result of several FOREX scandals.

According to its proponents, time stamps can generate an auditing system trail and allow bank clients to perceive currency rates during the transaction period.

Time stamps are used extensively in wholesale foreign exchange markets but not for retail spot trades and institutional market investors.

The UK Treasury says the Bank of England must mull over how time stamps function in its Fair and Effective Markets Review. Observers say it can boost financial transparency especially with the recent manipulation of Libor as well as international currency benchmarks.

The treasury office spearheads the Bank’s Fair and Effective Markets Review, which wants to increase financial transparency after a string of City scandals such as some banks’ rigging of the Libor and foreign exchange benchmarks.

The Bank of England was not spared from these indignities as it has been probed on the possibility that certain officials were aware of alleged manipulation of FOREX transactions and pricing. Bank officials did not comment on this allegation but it vowed to be more responsible under the stewardship of BOE Governor Mark Carney.

ASIC to Probe Spike in AUD

The Australian Securities and Investments Commission (ASIC) declared in a statement it will investigate market trades as the AUD was trading at US76.99 cents after adding up another one percent.

This is prior to the monetary policy decision of the Reserve Bank of Australia.

The Commission is also looking into FOREX movements just before the RBA released its statements in February and March of this year.

It appears that FOREX again anticipated the RBA’s decision with the AUD going up just before the central bank’s declaration pre-empting the policy meeting’s outcome and prompting scrutiny of ASIC.

The RBA claimed additional cuts were possible and rates may be reduced in May.

The rally of the Australian currency defied the RBA’s formal easing partiality. Compounding the central banks uneasiness with the AUD is proof that the US went through a difficult first-quarter that means the US Fed will stick to zero longer. ANZ currency strategists emphasized the currency only got along with a mid- limit value due to negative US payrolls data and the RBA’s on-hold verdict.

In view of the Reserve Bank of India's judgment to maintain rates at 7.5 percent on the same date, central banks appear headed toward interest rate stability before the Fed decision. Meanwhile, possibility of parity versus the NZD was left out temporarily after the pair was 21 basis points short of being even right before the RBA move.

Strategists do not put the same emphasis on the connotation of headline events like currency parity or crucial trading levels.

Crude and Brent Oil Update

As traders and the financial world reacted to the decreasing value of the dollar on one hand as well as Iran’s announcement last week on the other hand, crude oil prices went up. Brent and crude oil both priced at a profit of $1.67 to trade and $56.62 and $50.81 a barrel respectively. There seems a strategy of bump and dump one – prices are pushed up and then stock selling to get a profit.

The oil market was not so high at closing time Friday last week. There was a fall in the electronic oil trade due to the reports of an Iranian nuclear deal. But this did not continue at the start of the week when oil prices started recovering as analysts foresee that Iranian crude oil exports cannot rise immediately and will have to wait after several months.

During the weekend, Saudi Arabia increased its crude oil prices for the Asian market for May buyers. This lift backs the strong refining gains in the Asian region with a strong Dubai oil standard. This conclusion was made by Singaporean traders.