Tensions in Europe Mount Pressuring the Euro

European stock markets are moving higher as oil prices pick up. German earnings reports from Commerzbank, Thyssen Krupp and Heidelberger Druck failed to spark fireworks and German trade data at the start of the session saw a sharp drop in exports in December, but despite all this the DAX is posting a gain. The French CAC 40 outperformed and the banking sector bounced after a better than expected earnings report by Societe Generale SA. U.S. stock futures are also marginally higher, after a mostly positive session in Asia, where the Nikkei underperformed ahead of Abe’s meeting with Trump Friday. The pickup in oil prices and the flurry in earnings reports may have given markets some boost this morning, but upside moves remains challenges as investors hold back and await more guidance on U.S. policies going ahead. Greek concerns are flaring up pressuring the Euro.

WTI futures are up .6% at $52.65, off the intraday high at $53.03, which is a two-day peak. This extends the rebound from yesterday’s 20-day low at $51.22, and also continues the broadly sideways chop around $53.0 that’s been seen since early January. The unexpectedly large increase in U.S. crude stockpile data this week had been weighing on prices, though a decline in propane stocks, offset the large build in crude oil which suggests the overall demand for products is more than expected.

Grexit Risk Flare Up

Grexit risks flare up again, as the bailout program once again runs into problems and IMF and European creditors disagree over the sustainability of Greek debt the possibility of a Greek exit from the Eurozone is coming back on the horizon. Germany and the Netherlands have stressed that IMF participation remains crucial and German Finance Minister Schaeuble said yesterday that a debt haircut for a Eurozone member is impossible.

Greek unemployment steady, production picks up. Latest data from Greece shows some improvement in economic conditions, with production up 2.2% year over year in December, after 2.0% year over year in the previous month. Still, the breakdown showed that the rise was mainly boosted by a strong rise in electricity production, while manufacturing actually dropped -1.9% year over year. Unemployment meanwhile held steady at a very high 23%.

Germany posted a trade surplus of EUR 18.4 billion in December, down from EUR 21.8 billion in the previous month, as exports slumped 3.3% month over month, after a very strong November rise of 3.9% month over month, while imports were unchanged in December. after rising 3.5% month over month in November. Unadjusted data show a total trade surplus of EUR 252.9 billion in 2016, up from EUR 244.3 billion in 2014, as imports rose 1.2% and imports 0.6%. Imports as well as exports stood at record highs.