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Robert Sinche, RBS Global Head of Foreign Exchange Strategy, with the latest on the European debt crisis.
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Well despite all the doom and -- the -- just turning positive up about four points now despite that a disappointing US factory orders report earlier today in the ongoing mess in Europe talking of which the next couple of weeks are crucial for Europe -- waiting for the ECB decision on interest rates on Wednesday.
Spain's bond auction this week and a -- the election in Greece on Sunday F credible that.
-- actually rebounding against the dollar joining me to break at all down is -- -- -- obvious securities global head of FX strategy Robin thank you for joining us.
Let's talk about obviously what's going on in Europe that it -- just seems to go from bad to worse but I do get the sense of finally of their thinking that fiscal.
Union is the only way out of this do you agree and will they be able to achieve it.
Well I think that -- think he's been there for quite some time that obviously is going to have to be some pooling of interest and financial interest as we go forward.
And I think that's really being accelerated by the capital needs of the the Spanish banking system.
But surprisingly.
Politics are playing a role here since and it's not clear that that either the ECB -- the Germans.
Would really want to -- -- -- in too much in front of those great collections you know the the opposition leader Mississippi purses are -- they can get better terms.
If they hold out and I think that the last thing ECB NN and maybe the Germans want to do is actually -- -- better terms before that election so.
I think it's going to be pretty quiet on the on the agreement part before those elections in.
-- so with the ECB meeting on Wednesday and on expecting whole lot out of it there -- some economists to say well maybe they will cut that rate may be a quarter percent down to three quarters of a percent do you think it's too early for them to do that.
You know our European team back in May thought maybe they would do that but again I think the politics of the situation have taken over now.
And our view now is that that the ECB.
Feels like cutting rates between either doing in early June early July won't matter that much economically.
But unfortunately could matter a lot politically again with respect to the Greek elections so our guess is that no they don't act.
Although they may signal that they -- certainly aware of a slowing growth and they're willing to act if if they think they need to.
But what about those Greek elections if indeed we get.
You know I left wing -- the impala.
And they want to renegotiate.
And that it all falls apartment Greece falls out of the Euro.
What impact does that have on the rest of the eurozone and flat -- to the markets here.
Well you know I think that that that depends on the policy response.
The probability of the possibility of Greek leaving the eurozone Greece leaving Euro -- not a a low probability event not something it would take the markets by surprise you know.
But I think what it what it would require is for the authority to command pretty forcefully right behind that.
With a plan about the banking sector and had to recapitalize the Spanish banks.
And maybe -- movement -- -- provide direct support to the banking sector rather than going through sovereign governments.
So I think in -- sense Europe's gone beyond Greece right now.
Nine markets really -- -- okay grease in grease out it's not really that big an economy.
But what are you gonna do in Spain and what are you gonna do about that broader pooling of interest I think we've moved on to a different subject thankfully perhaps yeah.
And I think -- I think -- to be quiet this week ahead of the Greek election authority at a time Robert -- thank you so much for joining us.
As we talk about -- the latest ongoing travails of Europe things.
