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Spain's strong GDP growth may reduce fiscal imbalance
28 July 2015, 10:49
Spain's economy posted 0.9% q/q growth in Q1, is expected to accelerate
further in Q2.
Barclays estimates, in 2015 the cyclically adjusted fiscal balance will be slightly accommodative. The bank sees some downside risk to the deficit target of 4.2% of GDP, mainly related to the electoral cycle. The consolidated budget balance through April (excluding municipalities) has been reduced by 10.7% y/y: the deficit reached 1.05% of GDP versus 1.2% in April 2014.
Public expenditure was higher than expected in Q1 15, probably driven by the regional and municipal elections in May. Similar slippages on public expenditure in H2 15 is expected. Moreover, the government has announced cuts to the personal income tax rate, applicable in July 2015 and worth EUR1.5bn.
According to Barclays, "Overall, we do not think the extent of fiscal slippage this year will be large (less than 0.5%), mainly because strong growth is compensating somewhat, but a tighter fiscal stance will be needed in 2016 to meet the government's medium-term fiscal targets and debt-reduction objectives."
Barclays estimates, in 2015 the cyclically adjusted fiscal balance will be slightly accommodative. The bank sees some downside risk to the deficit target of 4.2% of GDP, mainly related to the electoral cycle. The consolidated budget balance through April (excluding municipalities) has been reduced by 10.7% y/y: the deficit reached 1.05% of GDP versus 1.2% in April 2014.
Public expenditure was higher than expected in Q1 15, probably driven by the regional and municipal elections in May. Similar slippages on public expenditure in H2 15 is expected. Moreover, the government has announced cuts to the personal income tax rate, applicable in July 2015 and worth EUR1.5bn.
According to Barclays, "Overall, we do not think the extent of fiscal slippage this year will be large (less than 0.5%), mainly because strong growth is compensating somewhat, but a tighter fiscal stance will be needed in 2016 to meet the government's medium-term fiscal targets and debt-reduction objectives."
28 July 2015, 10:47
BRENT CRUDE FUTURES DOWN $1.08 TO $52.39/BBL, LOWEST SINCE FEB 2 AS CHINA
STOCKS PUMMELLED
Intraday trend is weak as long as resistance 0.7350 holds and slight bullishness can be seen if it closes above 0.7350.
Any break of 0.7350 will target 0.7380/0.7410. Overall bearish invalidation only above 0.7500.
On the downside any break below 0.7250 will drag the pair further down till 0.7193 in short term.
It is good to sell on rallies around 0.7310 with SL around 0.7350 for the TP of 0.7255/0.7195.
AUD/USD trades in narrow range between 0.7250-0.7325, good to sell on rallies
28 July 2015, 10:42
- RES 4: 0.7411 (Cloud bottom)
- RES 3: 0.7391 (Cloud top)
- RES 2: 0.7347 (Kijun-Sen)
- RES 1: 0.7312 (20 day 4 H EMA)
- SUP 1: 0.7283 (161.8% retracement of 0.73256 and 0.7396)
- SUP 2: 0.7250 (161.8% retracement of 0.73266 and 0.74484)
- SUP 3: 0.7193 (61.8% projection of 0.7848 to 0.73266 from
0.7448)
- SUP 4: 0.7180
Intraday trend is weak as long as resistance 0.7350 holds and slight bullishness can be seen if it closes above 0.7350.
Any break of 0.7350 will target 0.7380/0.7410. Overall bearish invalidation only above 0.7500.
On the downside any break below 0.7250 will drag the pair further down till 0.7193 in short term.
It is good to sell on rallies around 0.7310 with SL around 0.7350 for the TP of 0.7255/0.7195.