bank of greece governor. and a swiss company a johnson & johnson takeover target. in athens -- guy: let's talk about why we are here. be speaking to's the governor of the bank of greece. he sits in the ecb as well. we need to have a conversation about what is happening on the ground in greece, which talking to ceos, they sound positive. a big rally in greek assets. then we come to the ecb. thinking about the big questions. the meeting on the eight. what is it ultimately going to deliver. that is what we are building up to. the ecb, a lot to think about at the moment. anna: a lot to talk about. let's have a look at where we are expecting to open. half an hour until the start of the european equity trading. asian session has been decent. indian equities up. movement,ting contrary to the direction of travel. since the victory of donald trump, the story has been of the strong dollar. the euro, up 0.4%. the ecb story factoring in. with this story, we are watching what is happening on the bond markets. the treasury market, back in action. a big move in commodities today. of optimism around. first world news. here is juliette. consumer japan's prices have fallen for the eighth straight month. inflation, gauge of dropping 0.4% in october from a year earlier. thenderlines how distant economy is from achieving the 2% inflation target. abortion took center stage at the final debate of the french republican primary paris the front runner defended his insight abortion views as his rival went on the attack. the fact that this became a focal point illustrates it is social, not economic, policies that differentiate the former prime minister's. voters pick their presidential candidate area donald trump says he is making togress in his efforts prevent air conditioning manufacturer carrier to move a factory to mexico. he tweeted, we will most soon can saying, he is working on thanksgiving to keep the plant in indiana. the company said it had held discussions and looks forward to working with the incoming administration. the chairman of a bank has said there is little chance he will resume talks to merge. this follows preliminary discussions that would have allowed the nordic regions biggest bank to move headquarters to the nederlandse. this was an exceptional opportunity to ask the question whether the dutch government has committed itself. alternative route which would have offered them better liquidity. it turned out they were at least for now not interested. juliette: 24 hours a day, powered by more than 2600 journalists. this is bloomberg. : let's talk about why we are here to read we are going to be talking to the governor of the central bank. we have in asked to take the temperature of what is happening in the greek bank sector. greeks much more advanced in the structure and process dealing with the bad loans then say italy. what we are thinking about is changes in legislation cover the process by which some of the loans are dealt with. the greek economy, which has been in proving, remains front and center. that was the point the chairman was making to us. whether we like it or not, we can do the best management we can. if the greek economy does not perform, that it will not allow us to go very far. guy: it does seem as if the jargon is changing. we are watching this rally. both in greek bonds and stocks. impressive quite over the last a month. we may see debt restructuring, a change of the debt profile. that move has been significant, trading around 6.9 percent. what can move it further down, if government ponds were included in the qe program. that could take us to around 5%. that is something the ceo is looking forward to. signal.ll be a a will mark not so much quantitative aspect, which you have been pointing out, but it will validate international creditors are sort of putting the stamp of approval and the credibility of the delivery of greece's program. usthat sense, it will help regain investor access. it will take us to the next step . guy: the biggest stamp of approval comes from the imf. will it the on board? it has said it will make a big decision at the end of 2016. that is what we are looking forward to. the meeting on the fifth, something to watch. will haveling me, we a second meeting before the end of the year. we are not quite done. anna: the imf has been vocal on the debt restructuring. delayght have room to decisions on the future of bond until 2017. they suggest rising bond yields have eased scarcity concerns. let's bring into the conversation the head of fixed interest -- when it comes to this story, the scarcity story was so dominant. until we saw the big bond drought. yields on the rise. what are you expecting? >> the big question is, will the ecb extend the qe program beyond march? you would have to say yes. if anything, they would be disappointed yields have arisen. that would be my central expectation. the marketith reaction be if that does not happen? i fear that doesn't happen we could see of here there -- cia .urther route i can't see how they would think that is for the better, for the good. i don't expect it to happen. if it didn't happen, we might see a further back up. guy: how worried you think they are about what is happening, if peripheral yields blowout? draghi talks about financial fragmentation, they have kept the lid on what is happening. talking market reactions, what would be the spread in that scenario? much of that is predicated on what happens in the italian referendum. get over some of these geopolitical events. elections in france and germany. that landscape, it is difficult to see the ecb allowing bond yields to go much higher. in the short-term, can they go higher? they can't. we will be watching very carefully the outcome of the referendum. anna: what about the divergence from policy and fed policy? if we see the ecb moving to it lookse program, increasingly as if they are on a different page, how will that play out? the mosts one of interesting things we have seen happen. the u.s. economy going down a different route. one of the benefits, low yields will\/\ -- keep the cap. they will put a lot of pressure on the euro and the yen. guy: do you think the ecb will appreciate a steeper yield curve? help thelso does is financials out? ened yield curve would be tolerated and welcomed. we have seen them take advantage of the fact they can borrow for 50 years, 70 years. they have taken that opportunity to expand borrowed maturities. anna: thank you very much. staying with us on the european open. coming up, as the dollar touches a weekhighs, we review of turbulence. and then we get details as the possible takeover around the biggest biotech firm. and the ceo has called donald trump a game changer. we discussed the trunk worldview -- trump worldview. ♪ anna: welcome back. let's talk about currency markets. a bruising impact on gold. a bruising impact on gold. which fell to a nine-month low. elsewhere in the commodities sector, copper surging. zinc heads to its highest close since 2008. still with us, our guests. what are your thoughts on the commodity space? it is the same thing that excites investors. the potential for infrastructure build out. guest: we've got stronger growth from the u.s.. that has got to be good for commodity prices. we've got theide, dollar at a 14 year high. a negative correlation between commodities in the dollar. i'm not sure the rise in the dollar and commodities can continue. one of them has got to change. i would save it is commodities. runs a chunkyone surplus. >> we have talked about only five minutes ago, there are big geopolitical events. trump,us is partly on higher growth. protectionism. partly on politics and european area over the next six or nine months. in the short-term, we can get quite sharp tight versions. anna: interesting to see how the markets are reacting in various asset classes. shows the chart that gold price against the u.s. dollar. the dollar rising in blue, the gold price coming down. gold under pressure. gold is typically seen as an inflation hedge. the markets are focusing on inflation when they went to and not other classes. >> when i think about gold, i think about three attributes. one, it can move with the dollar. another, when real yields fall, armageddon, gold can do well. as an inflation hedge over the medium to long term. term,dium and long markets are ignoring. they are focusing on the dollar going up. it is interesting. over the nextts six months focusing markets. that is why people have it in portfolios as their armageddon hedge. anna: political risk could put the focus back. we also see rising gold prices when investors are looking for an alternative to currencies. may meanomething that the gold price remains lower. that is right. trump doesn't like the qe policy we have seen from the fed. the fed seems to be looking for normalization. how far interest rates will rise, that is another topic. they are going to rise more quickly than without a month ago. less need for gold in the portfolio. guy: are you therefore buying tips, how much more does that trend have to run? price in tips, dollars. it reacts to real yields and inflation and as an alternative to gold. we have been buying it all year. it was a surprise it came right so quickly. just on the back of trump. in terms of the trade, much of the good news is already in the price. what we look at is the break even inflation rate. if you look at rake even levelson rates, you have of 2-3%. maybe inflation can go above those levels so there is still value. i know the u.k., if you go back this summer, that break even inflation rate was 2.2%. 80 basis points, a big price gain. i think most of that trade has happened. it anna: thank you for your thoughts. he stays with us on the program. ready for the exclusive conversation with the governor of the bank of greece, and 8:30. more from guy a little later in the program. minutes away from the open. up next, the movers in trading today. johnson and johnson said to make a takeover approach. details next. ♪ anna: welcome back. you are watching the european open. six minutes away from the start. 8:54 if you are in berlin. act telly and -- the swiss ug maker in focus. largest is europe's biotech firm. they have been talked about as a potential takeover target for years. they had previously said the company planned to remain independent. he is one of the largest shareholders. we will see if he has had a change of heart. briefly, investors approving the capital raising plan. seeing trading a little higher. 96% of shareholders attending the meeting yesterday in siena, back to the capital increase. to take place set between the seventh and eighth of december. futures suggest it will be higher at the start of the trade, broadly following a positive session in asia. a beautiful way to start a friday morning. this is bloomberg. ♪ anna: good morning and welcome to bloomberg. we have -- we are just moments away from the start of the european trading day. what are we focusing on today? dollar dominance. the greenback is set to cap its biggest three-week gains against the yen since 1995. where is the rally headed next? said to have leeway on its bonds decisions. we will speak exclusively to a government councilmember, yanis tenaris. and m&a for j and j? a johnson & johnson takeover target. european markets are about to open up. half a percent on the msci asia-pacific. we have got the dollar heading down today. let's get to the start of the european equity trading day. good morning, everybody. this is the imf function. it plays out the state of play beautifully. part, positive here. you look at industry groups leading that rally. consumer staples and health care. you see some laggards as more of those traits command. discretionary and financials. you to what is happening in the gilt market. just a couple of ticks lower as it stands. another chart that has caught my attention, gppv. pull that up on your bloomberg. the bearish bets on gold hedging it to a 10% drop are the highest since july 2015. the most bearish since then, showing you that increase and the downside pressure in gold continues relentlessly with expectations for the fed rate hike in december. potential stock movers -- monte dei paschi very much in the cross hairs. bank shareholders backing the italian bank's plans for a vital 5 billion euro capital increase at that meeting. currently, they are down almost 4%. investors -- it looks like they are not liking some of the latest news stories. quite a bit of selling. down over 4%. the whole banking sector, in fact, is in focus. deutsche bank putting out a note saying that italian bank stocks will be volatile around the referendum. banks on adding that the hole in europe are a dreadful investment, underperforming in europe and the u.s. by 62% and 16% respectively. of 9% off theion back of the potential takeover of the swiss drugmaker. earlyrations are at an stage, as we understand. but investors definitely putting money into the stock as we are talking. anna: president-elect donald trump has frequently slammed nafta. during his campaign, he described it as the worst deal ever, blaming it for u.s. job losses. the ceo of fiat says that trump's critical stance toward free trade could affect the carmaker's business in north america. i think there are a number of conditions in the u.s. that are not yet spelled out. i think the president-elect made some statements about how he sees trade. going to big issue, the way in which nafta is configured and the invocation on the industrial front. we have in all three countries, mexico, the u.s., and kennedy -- and canada. as a talking about trump games -- game changer for many asset classes. we are joined by the head of investmente at an bank in london. we have had a game changing effect on many asset classes, but there is so much we do not know about trump policy. what are your expectations around treasuries in the u.s., and how high can those yields go? in singapore. their call is that the 10 year u.s. treasury yields go up to 3%. we are currently at 2.38%. >> my feeling is that there is still somewhere to go with the backup in yields. the reason is because we have had some of the easy moves. easy moves happen early on. i think in the first hundred days of trump's presidency, he will go out of his way to talk about all the things he is going to do. he wants to enact some of those policies. bond market will continue to take price. if we have higher growth, higher inflation, higher interest rates, more bond issuance -- all of those things are about the bonds. we know that today, but i expect we will get more bad news in bond terms with those things coming through. for the time being, i continued to see a backup in yields. having said that, the idea that the world economy can go from being a very slow growth, low-inflation economy to being a fast inflation economy -- i see that less. we have yields in japan and europe which will put the lives on those treasury yields. anna: when we were having our last conversation, we seems to have divergent views coming out of markets. pimco saying it has further to run. you do not seem unashamedly gung ho for this given the concerns people have about inflation. >> that is all about pricing. there is no doubt inflation is going to be bigger than figures we have seen over the past year or two, or three years. it is all the price you have to pay for those. those breakeven inflation rates have already traveled a long way. there is room for them to expand more. but being on how at this point, i do not think so. we are still overweight that sector. we still think there is further to go. in terms of reflationary assets, assets that are going to do well, the pimco line -- they like tiff. they say reflationary assets are over owned by the market. are there any trades you are putting off because of higher inflation expectations in the u.s.? in the equity market we have seen this huge rotation from bond proxies into the cyclicals. if you are looking at more growth or more inflation -- whether it is that you are going to benefit from higher prices and more volume, it is going to be more money, whether it is going to be consumers. there are all these sectors. all of those things make sense. the rotation from bond proxies into the cyclicals reminds me of some value etf's that have been doing increasingly well, try to get that chart up quickly. go with the flow. value focused equity etf's gaining traction. more excitement around value plays. financials more interesting than they were five months ago darren: it goes back to how much you have to pay for that. the stocks travel very fast, very quickly. we still have bumps in the road, whether it be other geopolitical events we have coming up. some to those sorts of sectors already. i think we have more to go. a question is, they have come off a long way. is this the right time to be investing more? given that we think there is more upside to bond yields and momentum downside, maybe not at the moment. good time to update voters on what is happening with monte dei paschi. focusares are in following the approval of shareholders to the capital raising at yesterday's atm. it is down 4.5% in milan. it is a very volatile stock. it trades at around a quarter of a euro. ruane states with us on the program. just getting into the last trading day of the week. up next, the fight for france. republican presidential hopefuls clash in a debate ahead of the vote that could decide the french presidency. we are in paris next. eller dominance. the greenback rampage. and emerging-market rally. is there more to come? do not miss our exclusive conversation with the governor of the bank of greece. we are live in athens this morning. guy is there for us. ♪ anna: welcome back. this is bloomberg television, watching the european open. the markets, thanks given a holiday in the united states yesterday meant that we did not have much going on in equity markets here either. the u.s. futures are pointing up by 0.2%. european equity markets look fairly mixed. their. got actelion in -- there. we talked about potential interest from johnson and johnson. wasks monte dei paschi halted because of its trading limit, after falling 5.5% in milan. the stoxx 600 fairly flat. pressure coming through from the more peripheral euros on markets today. the ftse 100 is up a touch. the dax is fairly flat. and the cac is pretty flat as well. we will get a bit more direction as we go through the section -- the session, closer to the start of u.s. trading. here is sebastian salek. seb: japan's consumer prices have fallen for an eighth straight month, the longest decline since 2011. the bank of japan's cpi excluding fresh foods dropped from a year earlier. it emphasizes how distant the economy is from achieving its 2% inflation target. abortion took center stage at the final debate of the french republican primary last night. broner francois fillon was pro-life and alan to pay went -- jupee to pay j-- alain went on the attack. france is set to pick their 2017 presidential candidates. donald trump has that is making progress in his efforts to prevent and air conditioning manufacturer from moving a factory to mexico. ,e tweeted, we will know soon saying he was working on thanks giving to keep the plant in indiana. the company replied saying it held discussions with trump's team and looks forward to working with the administration. the chairman of nordea bank says there is little chance he will renew talks to merge with abn amro, following talks over the persuadedt would have the bank to move headquarters to the netherlands. it was an exclusive interview with bloomberg. >> exceptional opportunity to ask the question whether the dutch government has committed itself to a cell down in abn amro, which could mean an alternative route which would offer them better liquidity, which would also transform the landscape. it turned out they at least for now were not interested in that situation. ,eb: global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. the french provincial hopefuls have mentioned the fact that they clashed in the final debate of the french are public and former favorite, juppe, tried to make up lost ground as he lies in polls ahead of the vote this sunday. >> i want to reinforce the voice of france. i want to reestablish our ability vis-a-vis our partners, especially germany. from that point on, we are free to make her own choices, and i do not want france to be a vessel either of washington nor moscow. the real danger for europe is not russia. the real danger is economic. it is called the asian continent. it is not a military danger, but a danger in terms of global economic dominance. anna: let's export some of the themes that came up in the conversation. let's get to paris, joined by caroline kroner. how does a debate go? did it change things at all? caroline: actually, there was a poll online during the debate of people who watched the debate, and they said that 57% of people who watched this debate were more convinced by the front runner, francois fillon, then by alain to pay -- juppe. juppe has been lagging by 16 points in the first round. juppe had to give everything to catch up. he tried to be more aggressive with francois fillon. he had been accused of being too soft, to moderate. this time, he attacked francois fillon on his affinity with russia. we know francois fillon is much more pro-russia. and also social issues, like abortion or gay marriage. francois fillon had the opposite strategy. he tried to soften his views, given that he has been accused of being too extreme. about being called a middle-aged reactionary. he actually said antiabortion viewers -- views were personal and he did not want to change anything, and his position on gay marriage was the same. he did not want to change the gay marriage in france, but he wanted to restrict adoption for gay couples. caroline, what were the fundamental differences in the programs that the men outlined? as we mentioned, the main differences are on international issues, and on social issues. but if you look at the economic programs, they are actually pretty similar. both want to cut taxes. juppe wants to cut them more for small and medium companies. both want to add flexibility to the labor market. both want to cut public spending. to cuts fillon wants public spending by more than 100 billion euros, and alain juppe only around 85 billion euros. finally, juppe wants to cut the number of public servants by around 250,000, whereas the line wants to cut public servants by -- twice asy as many, half a million people, something juppe things is not credible. anna: thank you for joining us from paris. stick with darren ruane, the head of fixed income at investment wealth. i have pulled up a chart, talking about french election news on the political calendar. i pulled up this chart on the bloomberg. france gives you all kinds of french indicators. this is french employment, mainland and overall. you can see this trough time here, 2009, and the upward trend during the financial crisis. this is one of the big challenges that faces the french economy at the moment. this stubborn unemployment number, just one of the many incoming factors. darren: francois hollande, one of the premises was that he would reduce unemployment significantly from double-digit levels. you look at that chart, it has not happened. that is why it is likely that the seconds to round, it will be marine le pen and the center-right candidate. a lot of people are fed up with the social side. they do not believe in what they say. i think from a market point of view, what they will be really looking at his who is likely to win as it goes to the second round. juppemarine le pen and are more likely feel on. anna: it does not necessarily take high unemployment to bring populist parties to power these days. it is not necessarily about the fundamentals in the economy. investors are watching the french election for the reasons you describe. it is still a tail risk? the possibility of a victory by marine le pen -- is it considered a tail risk, or something that has a probability that is material? risk, but is a tail the tail risk has grown over the past six months. brexit was not expected. trump was not expected. we cannot rule it out. ppe outcome of fillon or ju is important. fillon is more to the right in terms of market reform policies. he has called for about 500,000 job cuts may be in the civil service. that will alienate some of the left-wing voters who might vote for him instead of marine le pen. might say, i do not want to vote for anyone. that is the risk. polarizedoters become -- another voting scenario we have discussed in part is in italy. i read a great bloomberg view piece that said -- my colleague francine and i were talking yesterday -- by mark gilbert, pointing out there is this danger that we chase shadows around populist policies right now, because investors have been so caught offguard by the brexit vote, by trump's victory. there is a sense we are looking in every cner to find political risk. darren: i think that is right. what is different about italy is with regards -- the uk's has had brexit, but that is a local problem. that is us choosing to leave. there may be wider ramifications. one ofcase of italy, if the opposing parties for renzi -- they want to leave the euro. we do not know what is what to happen. the referendum, does he resign? if he resigns, what happens to the political parties? i think the risks are much greater than maybe markets are pricing in as highly as they should. anna: the italian banking sector as another dimension. forn, thank you very much joining us today. very good to get your thoughts. darren ruane, head of investment at investec wealth management. coming up later, do not miss an exclusive conversation with the governor of the bank of greece. guy johnson is in greece and will be speaking to yannis stournaras. dominanceollar rewrites the rules for assets across the globe. ♪ anna: welcome back. this is the european open. december head -- fed hikes and strong data out of the u.s. has pushed the dollar to a more than a decade high. the move has had big ramifications for commodities, bonds, and emerging markets. the big question -- where does it go next? joining us for the remainder of the program, steve barrow, head of excess -- fx strategy at standard advisory here in london. i should copy out all our conversations about the dollar -- the dollar index down just a nottoday, at that does change the overall tone of the conversation. incredibly dollar bullish since the election of donald trump. does it continue? steve: i think it does. in terms of targets, i think something like dollar-yen is probably going to head toward 1.20 very quickly. euro-dollar will get below the parity level. a parity type range probably within the next couple of months. anna: it is a decent move from here, isn't it? 95 on euro dollar. you think parity could happen by the inauguration? steve: the dollar is on a tear, obviously, because the markets, in looking at the trump presidency, see echoes of ronald reagan back in the early 1980's, a period and the dollar absolutely flew. it rose by 50% or so in the first few years of reagan. he came in, introduced policies of cutting taxes for high .arners, increases in spending the market sees echoes of that. until we have got perhaps more concrete things to go on with respect to some of the other policies, perhaps on trade for instance, markets are going to run with this reaganesque type story. that is going to continue to push the dollar up. anna: this is what we have seen in the dollar this is what we hn in the dollar for 2012. a speedy ramp up in 2016, up to a decade high. just briefly, is there a point where you have to start to talk this down to boost trade? probably going to depend a lot on cute -- on who the treasury secretary is. the treasury secretary is ultimately the one who dictates dollar policy. this president, donald trump, may dictate everything. anna: i have a feeling that some of those lines might be blurred this time around. steve barrow stays with us on the open. up next, our currency, your problem. we are told what dollar strength means for emerging markets. plus, our exclusive conversation with the governor of the bank of greece. ♪ anna: welcome back. this is "bloomberg markets -- the european open." when the equity markets, here is a picture. stoxx 600 up. the ftse 100 flat. the tactic giving a bit of a downdraft. u.s. futures are pointing positive. we were without direction yesterday, with turkey and compton pie being consumed. today, the futures are adjusting u.s. markets will go higher. they have come off a little bit in the last half-hour. let's have a look at some of the stocks that are on the move. let me show you what i am watching. you mentioned monte dei paschi. currently down 7.6%. we were limited and now are back online. part of a recapitalization. --o, highs on -- on a kelly on actelion after news it might be taken over by johnson and johnson. the deliberations are at an early stage. the m&a we have seen in this industry, the stock up over 9% as we speak. making some tinto games as part of the stoxx 600, one of the key movers out there. comments from the chief executive officer. he is upbeat about the trump administration. insees significant growth the united states. as soon as the trump administration is in place, they will engage with them. once again, another potential beneficiary of the administration and the united states. anna: emerging market currencies are headed for their biggest monthly loss in more than a year as a dominant dollar has dampened the outlook for emerging economies. lows on the indian rupee and the turkish lira. halting a five-month rally in its tracks. steve barrow of standard advisory in london is still with us on set. we talked about the strong dollar. let's talk about the upside and it comes to emerging markets and weakness in em currencies. we have the, overall index of msci emerging market currencies, coming down very obviously since the u.s. election. it points to some of the commodities going higher. that is interesting. we need to start to pick apart the emerging markets, don't we? those that are going to do well if commodity prices go higher, and those that do not. those that are reliant on global trade, those that are less so. it is a complex picture. steve: it is. firstly, we would look at the economies that are most dollarized, that use dollars in their economies. we saw turkey yesterday. it is quite a dollarized economy. it is a problem for those countries. with u.s. interest rates rising, with the dollar rising, a lot of those companies in those countries have borrowed quite heavily in dollars, and they will probably want to shed those dollars. we have already seen a lot of , in chinang happening as well, for instance. that is obviously the first issue. perhaps another issue, as you mentioned, is those that are impacted significantly by potential trade. we saw overnight in south korea, for instance, consumer confidence falling sharply. part of that is due to domestic issues in the country, fiscal issues. maybe also part of it is looking a wary eye towards donald trump. i think the asian currencies, for me -- i mentioned before the about dollar-yen, which i see moving up. i think there will continue to be asian currency pressure. anna: let's pick up on one of the countries you mentioned, turkey. i have the wcrs function on bloomberg, total returns of all countries versus the dollar. the turkish lira. it is fascinating watching the moves yesterday. surprise decision by the central bank in turkey to hike rates t turkish lira spikes, and then it falls again. it cannot seem to gain traction. the central bank decision was about, trying to get stability and break the fall in the currency because of dollar debt? steve: yes, i think so. at the same time, perhaps has not been so's helpful to the central bank that the government has been putting pressure on the bank to lower interest rates. i think it is also a show of independence, which perhaps in theory you might have expected the markets to like. at the same time, maybe markets also saying the more you raise interest rates, the more the political pressure is going to increase on the central bank. that is maybe not a good thing. anna: the mexican peso down by 8.3% come a month to date, against the dollar. the third worst performer in there. a lot of the rhetoric during the campaign of donald trump was mexico.afta, was around and we have seen the pressure on the currency as a result. but without any hard facts as to where this goes -- even if nafta is ripped up, is some kind of bilateral trade agreement put in place that might not be as favorable to mexico as now, but might still be a trade deal? we do not know, do we? steve: i guess not. it would seem as if there will not be anything left to replace it. very harsh rhetoric, obviously, trump used toward mexico and nafta in general. withu said, subsequently respect to ripping up the tpp on his first day in office. it does not look as if any of that issue on trade is going to be perhaps water down as much as maybe many people would like to see it watered down, in which case the pressure on some of these currencies could be disadvantaged by the trade stance of the trump administration. that is probably going to continue. we have seen pressure on the mexican peso. maybe that is not the one in the firing line. the canadian dollar is part of it. let us look at the asian currencies. anna: as we moved to vienna, we will be focusing on the oil price. deny cad are, if we see $10 come up the oil price, what does that do to the currency market world? obviously, it has specific indications for those currencies that are related to that oil component. at the same time, we have a lot of currencies that at the moment -- that should be lifted by the commodity price strength. it is really not being done so. i think that reflects the fact that the dollar is very strong. trump is trumping everything, if you like. whilst that is the case, movements in commodity prices, weather up or down, are not going to have the impact on the currency we might anticipate. much.thank you very steve barrow stays with us. coming up, don't miss an exclusive conversation. guy johnson is in athens. he will be speaking to the governor of the bank of greece. we are live with that conversation, next. ♪ anna: welcome back. this is the open. the great banking sector is up more than 20% in a month on expectations creditors may finally ease the country's debt burden. it's join guy johnson, who is live in athens, for an exclusive interview with yannis stournaras , governor of the bank of greece. amazing to be here at the bank of greece to talk about some of the big issues surrounding this country. as you say, we have seen a significant rally in greek assets, of late. this as we build up to a really important meeting at the beginning of december. the calendar is quite important. that meaning is going to deal with the program that is underway here in greece. it is also going to deal with debt relief surrounding greece as well. that is the finance ministers meeting. what is happening the day before is the italian referendum. yournor, thank you for time. thank you for inviting us to your bank. we have this big meeting coming up that everybody is anticipating on the fifth. the finance ministers gathering to talk about what is happening in greece. the day before, we have the italian referendum. are you a bit worried about what the italian referendum may do to what happens on the fifth? are you concerned about the timing? yannis: well, not exactly. i think the fifth is independent of the fourth. guy: right. yannis: to put it mildly. guy: do you think italian politics, if there is turbulence in the financial markets -- is there an effect into asset prices the next day? maybe that will be the focus rather than the finance ministers focusing on what is happening with greece. yannis: well, they are two different things. i think the agenda on greece is now fixed. economic developments in greece are better than expected. on the macro side, the fiscal side, let's not confuse the two. guy: that meaning is important for a number of reasons. it clearly is going to be a focus of attention for the markets as they look at what is happening with debt, as they look at what is happening with the program. the imf has indicated that at the end of this year, it is going to make a decision on whether or not it participates, going forward from here. is that a kind of now or never meeting? because next year, politics becomes very difficult in europe. we talked about italy already. we go into the dutch about, the french vote, the german vote. is that meeting on the fifth a now or never? yannis: i do not believe it is like now or never, but it is sooner the better, as far as the great cases concerned, because we are entering into a period of continuous elections in europe. so the sooner we finish up with the greek case, the better. guy: is your expectation the imf will remain part of the program? yannis: i hope so. i think every player wants the imf in. guy: i have been talking, since we arrived here, to a number of bank ceo's, to get a sense of thingsy think they see developing. they say the fifth is important but there is a possibility of further meetings. so, if we do not get a deal done on the fifth, we still have a few days? yannis: i think everything is ready for the fifth. but from my experience, even if there is something at the end, a small delay, it does not matter. the government here is very evaluation.sing the so i hope that the fifth is going to be quite small. guy: we have always had this kind of issue of the mathematics surrounding sustainability. yannis: yes. in september 20 15, mario draghi talked about the idea that maybe the ecb should look at the sustainability story. did that ever happen? if not, why not? yannis: as you know, the sustainability now is different. sustainability now relies on, every year, greece will pay not more than 15% of gdp in amortization of their interest payments. there are people who are very close to that. the distance is not that large. so i do not expect that the measures needed for sustainability are that severe. guy: right. does that imply, therefore, that the debt relief actually is a fairly manageable story as well? i am curious to know what you think debt relief ultimately will look like, as you feed it back into what we have just been talking about. yannis: as you know, there are the so-called emergency measures. for us, for greece, it is much better to specify the measures now, even if, as we know from the program, they will be implemented after the end of the program. but everybody, including market participants, wants -- and the emf and the ecb, perhaps -- what the measures to be specified now, even if they are for later. market clarity and transparency implies that we will be better off if the measures will be specified now. bring up market participants. the last few weeks, we have seen a rally in great financial stocks, in stocks in the greek bond market. greek bar -- greek banks still trade on very low book value. the numbers we're talking about, why is the market pricing great banks that way? what risk is the market applying to those institutions, do you think? yannis: as you know, the crisis did not start from the greek banks. they were the victims. the crisis started from the sovereign. and the contingent was from the sovereign to the banks. so they have suffered a lot. much better. they are well capitalized. they have enough provisions. quarters,e last two we have seen a better npn development. so things start becoming better, even for banks. for profitability, better in the last quarter. and as the economy recovers, bank profitability and the development of npf's are becoming more benign. guy: but it is a long workout. yannis: exactly. there is the stock of npl's. also a a problem, but big opportunity. we have done simulations through the rank of grace. if they meet their targets we have set for the banks, the greek banks will not need more capital. on the contrary, capital will increase. high-quality capital will increase in the next few years if they meet the npl targets we have set for them. i would say they are realistic targets. guy: we have talked about what is happening on the fourth, focus on italy. we have talked about brussels on the fifth, the meeting of finance ministers. then, the eighth, which the market is waiting for, to see what happens in frankfurt with the ecb meeting. beember last year, it could argued that the ecb did not deliver what the market was looking for. we saw quite a violent reaction as a result of that. is there a sense, do you think, on the governing council, that we do not want to see a repeat of that? yannis: they -- if you look at numbers, inflation is on the rise in europe. better than we have had before. calculated that the ecb's contribution, the monetary policy contribution, is quite substantial to this effect. so the ecb has delivered. sometimes markets are very impatient. they want it delivered now. say, now or never. this is not that. the ecb takes a long-term stance. trust the ecb. we are doing the right thing. on the eighth, we are going to discuss the administration, the new focus, and then, we will decide what to do. guy: has tension grown? is your sense that tension is growing as a result of the fact that bond yields have risen, as a result of which there is not maybe the same requirement to change the parameters of the program? yannis: well, it is -- it is true that bond prices and bond yields have changed. we are entering, perhaps, a new idiom, a new year. show that our policy works. inflation is on the rise, as i said before. we look at all this data on the eighth of december, and we will decide. of course, monetary policy will continue to be accommodating until inflation is at the desired level, which is 2% or slightly lower. still a long distance from this target. to: so it is far too early be talking about the keyword, the tapering word. yannis: it is far too early, exactly. guy: one thing we have seen as a result of donald trump's election has been a steeper yield curve. is that desirable in your mind? yannis: from the bank point of view, it is, yes. it is a desirable effect. guy: because it helps the banks. but it does raise borrowing costs. yannis: yes, but if growth also goes up, it does not matter. because now the most important problem is low growth. if growth improves, it is expected that bond yields are going to rise. guy: you talk about rising inflation, and even the five years point to the fact that, quite some way out, inflation is not going to get back to target. that is some the market is pricing in at the moment. your data and forecasts seem to indicate something as well. tenant yellen talks about running a hot economy. and she sees that she has seen this. it will be interesting to know what she thinks now. she things that overshooting on the inflation story is maybe something central banks, or her central bank, should think about. is that something the ecb should think about as well? yannis: not yet. the cycle differs now in europe, compared to the united states. we are in a different phase of the cycle. guy: but do you think it would be desirable to point out to the markets that even if -- once we get to inflation targets, actually running beyond that a little bit would be something the bank would tolerate? yannis: no, we have not discussed this at all. guy: one final, quick question. when do you anticipate -- we see this in greek bond yields, through 7%, which is an important line in the sand. when you see greek bonds being included in the qe program? yannis: that is up to the governing council of the ecb to decide. let's see what happens on december 5, and if we will have something concrete on this. then, we will take a decision. ay: governor, it has been great pleasure. thank you very much indeed for spending so much of your time with us. we clearly have some much to talk about. hats and -- wear two have to focus on what is happening here in greece and what is happening at the ecb. i want to give a quick moment to ask one final question. how would you describe your relationship with the current administration here in athens? is it a good relationship? it is positive? or do you feel that relationship has become more difficult? yannis: it is positive now. it is much better than before. we view the future now with more optimism. guy: you said that greece is beyond the worst. yannis: the worst is behind us now. guy: the financial stability review that came out yesterday -- yesterday seems like a long time ago -- talks about the fact that we could see a return to the financial fragmentation that mario draghi has talked about in the past. you do not see that happening again, particularly when it comes to this country? yannis: no, in greece the situation has improved a lot since last year. compare the administration now to last year's situation. you have a better microeconomic environment, a better fiscal environment. and also banks are much better off. well-capitalized. well provisioned. the -- the main target is to bring down the stock of nonperforming loans. that is a big task, both for the banks and the greek economy. italians also. it is a huge opportunity. guy: talking to ceo's, one thing they have pointed out to me is, the greek people do not feel it. the greek people are not going to feel this recovery. yannis: if numbers improve, yes, they will feel it in the pockets. guy: how long will that take? what we are seeing at the moment around the world -- we have seen it brexit, seen it in the united states with the election of donald trump -- is the sense that we have this group of people who do not feel the recovery, even when the numbers start to show it. how do we convince them the economy is on track? yannis: it was very high and is still high. it is falling. we have employment creation. that is the first impact that people will feel positively on their pockets, i think. five or six terrible years. but the situation is improving now. that is my argument for the , isrnment to the people that the worst are behind us. sacrifices have not been wasted. the economy is fully rebalanced. we started with huge deficits six years ago. now, we have surpluses in both the current account, the primary budget -- it has improved a lot. we see it. from nontraded goods sectors and activities into traded good ones, more extroverted. -- this is a very good development, which makes me look to the future in a more optimistic way. the and the people trust institutio of government? they trust the central bank? they trust what is happening over the road in parliament? they trust these people will deliver for them? because it is an act of faith at this point in time. yannis: judged by results. it is true we had six very difficult years, i said. failed,ernments actually, during this period. the starting conditions in greece were much worse than in the other program countries. of course we have made mistakes. the institutions also made mistakes. politics, whatin matters mostly our results, and the results are positive. of course, the other side of the story is a huge deterioration. wages have fallen. but on the other hand, you have a much more balanced economy now. and so the future is -- is better for us. guy: the future is better. do you think we need to see some sort of concrete, physical evidence of that happening, for instance the end of capital controls? sort are the big, looming of columns that continue to prop up this sort of concern that the greek people have that we are still in, in many ways, crisis mode. yannis:, in many ways, crisis mode. yannis: capital controls do not have such an incremental effect on the real market. we have learned from other countries who have imposed capital control in a very cheerful way. not see say -- we do evidence of capital controls having a negative impact on the real economy. aere is no cloud without silver lining. one positive effect of capital control is electronic payments, which were very low -- a realnic payments have tax basis. so taxation is going much better , because of electronic payments, because of the development of electronic payments. this is benign, in fact. guy: thank you for so much of your time. governor yannis stournaras joining us at the central bank of greece. bloomberg continues. this is bloomberg, live from athens. ♪ francine: the almighty u.s. dollar has for its steepest rate gains since 1995 against the yen. a much further will the rally run? greek banks bounceback on the hope of debt relief. the governor tells us the sooner, the better. the future of france in focus. republican hopefuls go head-to-head one last time before the candidate is chosen this weekend. who will be the one to take on marine le pen in the elections? this is "bloomberg surveillance." i am francin

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