US Open – Greece Dominates but Data Also Eyed

U.S. futures are slightly lower ahead of the open on Thursday, tracking losses made in Europe as officials pour cold water on yesterday’s reports that creditors had started crafting a staff level accord.

Senior officials including German Finance Minister Wolfgang Schaeuble effectively rubbished reports yesterday that a deal had been agreed claiming the two sides have made no real progress. While the rejection of a deal was widely expected following the initial comments, the markets did respond very positively and what is interesting is that moves have not been totally reversed today, far from it actually.

That would suggest that despite the rejection of a deal, these comments from a Greek official have made investors more optimistic that a deal will be done. Once again this morning a Greek government spokesman has claimed they’re aiming to have a deal done by Sunday, although there were no details of what such a deal would include. Unsurprisingly, the latest reports of a deal haven’t had the same reaction in the markets as we saw yesterday given how quickly other officials previously rejected claims. I’m sure we can expect more of the same before the end of the week.

If we can get a deal over the weekend and not just one that kicks the can gently down the road and extends the deadline by another four months, it would remove another large chunk of uncertainty from the markets. Greece may be small and insignificant to some but it would be wrong to underestimate the impact a “Grexit” would have one the region both in terms of contagion and the precedent it would set. The euro is only irreversible as long as all members remain.

We will get some more economic data today among the constant flow of Greek updates. Weekly jobless claims are the first to be released and are expected to fall slightly to 271,000 , once again highlighting the strength in the U.S labour market at the moment. Pending home sales will follow and are expected to show a monthly rise of 0.9% in April. Finally we’ll get the latest crude oil inventories figures, with another drawdown expected for a fourth consecutive week. It is expected to be the lowest drawdown in that period although it’s worth noting that each of the last three have been below expectations so maybe we should expect a repeat today.

The S&P is expected to open 3 points lower, the Dow 26 points lower and the Nasdaq 9 points lower.

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Craig Erlam
Based in London, England, Craig Erlam joined OANDA in 2015 as a Market Analyst. With more than five years' experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while conducting macroeconomic commentary. He has been published by The Financial Times, Reuters, the BBC and The Telegraph, and he also appears regularly as a guest commentator on Bloomberg TV, CNBC, FOX Business and BNN. Craig holds a full membership to the Society of Technical Analysts and he is recognized as a Certified Financial Technician by the International Federation of Technical Analysts.