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The markets may not reflect it but Greece has managed to secure its third bailout, but there are a few details that need to be finalised. Athens will use one hand to take the bailout this week and with the other repay its creditors next week, continuing the cash merry-go-round.
The nation has been surviving off of handouts for the past five years, and the feeling is that it will be living off them for another five years. Unless the Greek government commits to real change, the nation is doomed to remain on the same path. Traders always knew that Greece would receive the next bailout so this isn’t a time to rejoice, and dealers remain sceptical that the Athens administration will fall into its old habits.
China has taken the decision to devalue its currency, and since Beijing is very protective of the yuan it is a clear sign that it is running out of ideas. China is trying to portray an image of a gentle slowdown, but in reality it is trying frantically behind the scenes to keep its levels high, and traders aren’t buying it. The commodity-related companies are feeling the pain of the Beijing decision, and faith won’t be restored in the metals industry until Beijing’s actions show signs of improvement.
We are expecting the Dow Jones to open 85 points lower, at 17,530, as profit-taking kicks in after last night’s rally. Yesterday’s contrasting comments from Federal Reserve members Stanley Fischer and Dennis Lockhart have left traders none the wiser about when interest rates will rise. Traders love hearing what they want to be told, and Mr Fischer’s remarks about rates remain unchanged while inflation is low.